For months, New Haven leaders have cautioned that a large property-tax hike will be necessary to close the city’s budget gap. This weekend Mayor John DeStefano Jr. put a precise figure on the increase.
DeStefano announced that his budget proposal, to be submitted tomorrow, will include a 3.5-mill property tax hike. Each mill represents a tax increase of $1 per $1,000 of assessed property value. The increase would bring the total property tax rate to roughly 43 mills, 9 percent above the current rate.
As the city’s largest real estate property taxpayer, Yale will bear a significant share of the increased tax burden. Although the University’s nonprofit status makes Yale exempt from property taxes, the University holds a large amount of taxable commercial property in the city.
Associate Vice President for New Haven and State Affairs Michael Morand said the proposed tax hike would amount to an increase of roughly a quarter of a million dollars over the University’s current $3 million payment. These taxes are in addition to a new undisclosed voluntary payment Yale has agreed to make to the city this year.
With the increase in property taxes, DeStefano said his proposal avoids making layoffs or cutting into key city services, though he said the size of city government will continue to decrease through attrition.
“We continue to reduce the size of government, but at the same time I don’t want us compromising education and public services in the city,” he said.
DeStefano also said that because of his commitment to encouraging economic development, he would not cut financing for Tweed-New Haven Airport and area arts initiatives.
The proposal is preliminary and may change depending on final expenditure figures and the city’s allocated state aid, which is the largest source of New Haven’s revenue.
The budget has not yet been presented to the Board of Aldermen. DeStefano met with the board to discuss the budget last week, but no specifics were given at that time.
“All I can say is we’re in a very difficult budget time,” Board of Aldermen President Jorge Perez said.
Ward 20 Alderman Charles Blango is lobbying the state legislature to allow New Haven to impose a sales tax to augment its property tax revenues, a proposal that has drawn criticism for its potential negative impact on area business.
“If we could get a sales tax passed on a statewide basis that would be divvied up in a manner to help cities, which I think need the help, that would work,” Ward 29 Alderman Carl Goldfield said. “I’d be worried about a sales tax that would be imposed just in New Haven because it’s so easy to drive across the border to avoid it. I don’t have a lot of faith that people won’t leave New Haven to save a couple of pennies.”
DeStefano said in general he supports diversifying municipal revenue bases, but he thinks the city’s financial problems are indicative of a more widespread problem in the state’s tax structure.
“The problem is there’s no connection between where sales tax is raised and where it’s needed,” DeStefano said, pointing out that wealthy communities like Greenwich have the state’s largest tax bases.
Blango did not return calls this weekend.
Morand said New Haven’s current fiscal situation is common to cities across the country.
“This shows how vital it is that the city focus on economic development,” he said.