With Mayor Toni Harp’s budget proposal due to the Board of Alders by week’s end, New Haven will rely on the state’s commitment to municipal aid to bolster the city’s revenue.
Gov. Dannel Malloy revealed his proposed budget to the state’s legislative body last Wednesday. In his address, he reaffirmed his support for Connecticut’s Payment in Lieu of Taxes grant — a program that reimburses cities for revenue lost to tax-exempt properties. City Hall spokesman Laurence Grotheer said the PILOT funding and state aid for the city’s public school system would be critical sources of revenue for New Haven, which garnered 42 percent of the revenue in its general fund from the state in the 2014–15 fiscal year.
“New Haven is extremely dependent on this influx of money from the state,” said Scott McLean, professor of political science at Quinnipiac University. “It’s enough to determine whether or not the city is fiscally sound for the next year.”
The bulk of the city’s operating fund comes from property tax revenue. In last year’s budget, property taxes accounted for 50 percent of the city’s revenue.
However, Yale’s status as a nonprofit institution means that all University property is exempt from city taxes. McLean said PILOT funding has helped to fill property revenue gaps in New Haven and other Connecticut cities.
McLean added that, while Malloy has pledged not to decrease state funding for PILOT, the governor’s proposal includes no plans to increase aid.
“The PILOT program has always been underfunded,” McLean said.
Still, Grotheer said, the governor’s commitment to municipal funding has been a source of comfort for the mayor and city officials in the Finance Department. He added that while the city and state budget processes run independent of one another, the mayor will closely observe the state General Assembly’s deliberations in Hartford over Malloy’s proposed budget.
McLean said he expected senators and representatives from cities most affected by PILOT funding would fight for even a marginal increase in the grant.
“I think the division in deliberations will be between urban and suburban districts instead of Democrat and Republican,” he said. “That’s where all of this revolves in the end.”
Urban areas, like New Haven, tend to have greater portions of tax-exempt properties and stand to benefit more from increased PILOT funding, according to McLean.
He added that, with State Senate President Pro Pempore Martin Looney representing parts of New Haven, urban districts may have more power in deliberations than suburban districts.
“It’s too early to say where we will end up on municipal aid but maintaining levels of aid is a priority for both the governor and the Senate Democrats,” said Adam Joseph, the spokesman for Looney. “The governor ran the first lap of the budget relay race, and now the legislature will run the second leg.”
Grotheer said the city would also continue to depend on the state’s aid to New Haven Public Schools. Over 70 percent of the state funding that the city receives is allocated to the public school system, and Grotheer said that Harp plans to expand on the city’s productive relationship with the state on education.
Gary Rose, chairman of the Government and Politics Department at Sacred Heart University, said he expects such partnerships between the state and municipalities like New Haven to extend even further, including working to address the issue of eliminating budget deficits at both the state and municipal levels.
“Toni Harp, for example, has been getting some high marks,” Rose said. “One way the state could attack the deficit could be to ask the cities to get involved.”