Due to declining state aid and increasing expenditures on public safety, the mayor’s budget proposal for the upcoming fiscal year calls for the largest increase in property taxes yet during his 12-year tenure.

The budget, which Mayor John DeStefano Jr. will submit to the Board of Aldermen today, proposes a 4 mill increase in the property tax rate, which represents an increase of $4 per $1,000 of assessed property value. The budget increases spending by 5 percent, including the hire of 24 new police officers and 16 new fire fighters. City officials described the budget as thrifty, saying the tax increase was necessary due to the state’s underfunding the city on reimbursements for education expenditures and on Payments in Lieu of Taxes, by which the state offsets the city’s lost revenue from tax-exempt non-profits such as universities and hospitals.

“They’ve done a pretty good job of controlling costs, and there’s not a lot of fat in the budget, not a lot of wasted money,” Board of Aldermen President Carl Goldfield said. “There’s a lot of just basic, fundamental needs — we want to keep the libraries open, and we have to educate our kids. People are really going to be looking hard at whether there is any discretionary spending in this budget, but we will be hard-pressed to find any.”

Although Yale, as a non-profit institution, is mostly exempt from city taxes, the University will be affected by the tax increase due to its ownership of some taxable profit-generating property. Last year, University officials estimated that a 3.5 mill tax increase would have cost Yale roughly a quarter of a million dollars. Michael Morand, associate vice president for Yale’s Office of New Haven and State Affairs, said he could not comment on this year’s budget proposal, which he has not yet seen.

The budget allows for rising health-care costs and contractual salary increases, in addition to allotting $15 million for capital investments in the Farmington Canal and for work done to repave streets and maintain sidewalks. The budget also creates eight new positions and allocates $200,000 to start publicly financed mayoral elections.

Ward 14 Alderman Joe Jolly said the board will try to limit the tax increase, which would be the fifth straight increase in property taxes for the city. Last year’s final budget increased the property tax by 3 mills, slightly below the mayor’s initial proposal of a 3.5 mill increase. This year’s increase, which is projected to bring in $16 million for the city, represents a 9 percent increase in property tax rates.

“My hope is that we will not be raising taxes 4 mills,” said Jolly, the chair of the board’s Finance Committee. “We’re going to take a fine-tooth comb and go through it and see how we can reduce costs even more.”

But Jolly said the few increases allowed for in the budget, including the new staff positions and the money for publicly financed elections, probably will not be drastically cut. Jolly said a few staff positions are being eliminated, including a paid staff position in the city’s animal shelter, that would save the city $1 million in total, and the increased money spent on elections, he said, represents only a 20 percent rise in the amount of money the city budgets for managing elections.

Ward 5 Alderman Jorge Perez said he had not seen the details of the budget, but felt that a 4 mill increase is significant.

“4 mills is a big number,” he said. “It’s going to be a tough budget.”

New Haven annually struggles, Jolly said, with the amount of tax-exempt property within city limits, especially as the state does not fully fund its PILOT obligations. Forty-seven percent of the city’s commercial and residential property is tax-exempt, according to a statement the mayor’s office released earlier this year.

“Budgets grow by predictable numbers, and the state underfunds us by predictable numbers, so, with those two things together, we just keep getting a gap,” Jolly said.

According to a presentation on the budget prepared by the mayor’s office, the state underfunds the PILOT payments by approximately $14 million.

“If you adjust for inflation, since 2001 state aid has gone down $30 million, and that $30 million has to come from somewhere,” said Rob Smuts ’01, the mayor’s deputy chief of staff.

Smuts said he questions whether the Board of Aldermen would be able to cut much spending from the budget. He said that since 2001, the city has cut 15 percent of its workforce.

“We’re down pretty much to the bone in a lot of departments,” he said. “It’s really hard to see — unless you’re willing to go after [police, fire and the Board of Education], and I’m not sure people have the stomach to go after those areas — where you could cut realistically.”

The eight new positions created include one in the zoning department, one for the position of budget director, and six positions for a new library branch in the Hill neighborhood. The zoning position is in reaction to a recent court decision that has forced the city to revamp much of its zoning laws, and the creation of a staff budget director comes after controversy regarding the current director, Frank Altieri, who works as a contract employee and is not required to file ethics forms disclosing potential conflicts of interest.

Smuts said the city is constantly looking to increase the amount of money the state provides the city. He said the city is looking into arranging a day, probably in April, when New Haven officials and citizens can travel to Hartford to lobby the state government.

The Board of Aldermen will be holding hearings on the budget in the upcoming weeks and will have a final vote on the budget sometime in May.