A new emphasis on defense spending in the state and federal budgets released this week will cost New Haven and other Connecticut cities millions of dollars in education revenue sharing and urban redevelopment grants, local officials said.
Under a spending plan Gov. John G. Rowland unveiled yesterday during his State of the State address, New Haven will lose at least $4 million in state aid next year, acting city budget director Frank Altieri said.
“I cannot understate the magnitude of the problem,” Altieri said. “This is a very difficult balancing act. We’re faced with a very, very difficult task in the next two months. We’re going to have to lobby the legislature to restore some of these funds, or we’re going to have to look into new cutbacks in city programs.”
The governor and the Democratic leadership in the General Assembly will iron out the details of the $13.5 billion budget over the next few months, even as they grapple with another fiscal problem — how to deal with a current $350 million budget deficit. The deficit is expected to rise to $650 million by next year.
Mayor John DeStefano Jr. predicted the funding cuts Jan. 31, when he announced a three-year “stabilization plan” that will allow the city to absorb the drop in revenue through early retirement packages and cuts in employee health care benefits.
DeStefano, who was in Hartford yesterday for the announcement, was unavailable for comment. Reports of a gunman in an underground parking garage at the state Capitol complex forced police to seal off the area for several hours, stranding DeStefano and hundreds of state lawmakers, a city spokesman said.
In his address, Rowland defended the budget cuts, saying that the souring economy and new mandates for defense spending placed him in a tough position.
“The projections we used to forge the budget compromise of last year are no longer valid,” he said, speaking before a joint session of the legislature. “The state has less money than we all projected. And we cannot afford to pretend otherwise. It is our responsibility to face that fiscal reality. And our willingness to deal with the stark clarity of the balance sheet will determine our ability to keep Connecticut working.”
Neither Rowland nor spokesman Dean Pagani were available for comment yesterday.
In addition to the state funding cuts, New Haven is slated to lose about $760,000 in drug elimination grants from the federal Department of Housing and Urban Development. President George W. Bush released his $2.13 trillion federal spending plan Monday.
Bush’s HUD budget also cuts the multi-million dollar Empowerment Zone program, which has provided New Haven and other cities with urban renewal grants since 1997, when former President Bill Clinton convinced Congress to pass the legislation.
But the city’s most immediate concern is the loss in state aid.
Under Rowland’s budget proposal, New Haven will receive $200,000 less next year in school funding from the Education Cost Sharing, or ECS, program.
Borrowing a phrase DeStefano has used repeatedly over the last two weeks, Altieri said he was outraged that the state is attempting to balance its budget “on the backs of its cities.”
“I’m a little surprised, particularly when I look at ECS,” he said. “The state has a constitutional obligation to fund public education in the U.S. To reduce the size of the grant for one of the most impoverished cities in Connecticut seems ridiculous. It’s like balancing the state budget on the backs of schoolchildren.”
Although most of the funding New Haven receives from the capital goes towards education, the state also compensates the city for the tax-exempt properties of hospitals and colleges — including Yale.
The Payment in Lieu of Taxes program, or PILOT, also compensates cities for state-owned land.
Altieri said that the city will receive only $28.3 million from PILOT next year, even though it should receive $33.2 million based on this year’s comprehensive tax reevaluation.
The money lost through PILOT, combined with the $4 million New Haven will lose in regular budget cuts, will affect the city as if it had lost $8 million, Altieri said.
“This is not good,” he said. “This is not good.”
Altieri said he did not know how DeStefano’s plan would absorb the additional losses.
“We haven’t looked into that yet,” he said. “I’m not in a position to comment on that today. I wish I was.”