After two years with a combined $12.5 million of deficits, the city closed out the 2014 fiscal year with a surplus, Mayor Toni Harp announced Tuesday.

In a press conference with City Controller Daryl Jones, Budget Director Joe Clerkin and several New Haven alders, Harp projected that the city will add another five million dollars over the course of the 2015 fiscal year — which started on July 1, 2014 and will conclude on June 30, 2015 — by refinancing its outstanding bonds. Since the start of the 2015 fiscal year, low interest rates have already allowed the city to save $14.5 million through refinancing. The savings, Harp said, will allow the city to end the fiscal year with a $2 million surplus.

“The bedrock of progress is wholly dependent on a sound fiscal condition of the city,” Harp said.“We are confident about the forecast of a sustainable recovery.”

Harp emphasized that for its continued recovery, the city would depend on recurring sources of revenue, such as property taxes and parking fees, as opposed to one-time fixes, such as asset sales.

The Elm City ended the 2013 fiscal year with a $8.7 million deficit in the city’s general operating fund.

In the 2014 fiscal year, the city saved $4.1 million by refinancing bonds. An additional $600,000 in operating budget surplus reduced the deficit by a total of $4.7 million, enough to break even.

Jones said the $14.5 million saved in the 2015 fiscal year thus far would, in part, be allocated to pay off the city’s debts and begin to rebuild its “rainy day fund,” which was left empty by recent budget troubles.

According to Clerkin, in several cities similar to New Haven, the ideal rainy day fund represents five percent of the city’s operating budget. With a budget of $510 million, New Haven should save close to $25 million in total, Clerkin said.

But this ideal is not yet attainable for the Elm City, Jones said.

“I would be happy with 10 million, he said. “I think that’s a realistic number.”

In her announcement, Harp acknowledged the New Haven Police Department and the Board of Education for ending the fiscal year within their respective budgets.

She added that the city saved money while also expanding insurance coverage for city employees by switching providers.

“The new administration is slowly but surely changing the cultures within the city departments,” Jones said. “[Mayor Harp is] the coach, and she said we’ve got to work on balancing the budget, so we did.”

Harp said the Elm City’s immediate goals include continuing to rebuild the depleted rainy day fund and improving the city’s retirement funds.

Clerkin added that the city’s finance department was eager to report good news on the budget front for the first time in several years.

“It’s encouraging,” he said. “We hit a trough, but now we’re on an upward trajectory.”

The city’s budget for this fiscal year is $719.7 million, according to the Mayor’s budget summary.

ERICA PANDEY