Faced with unexpected changes in revenue, New Haven city officials shaved the city’s projected expenses to balance Mayor Toni Harp’s budget proposal, which is due to the Board of Alders on Sunday.

Harp announced at a City Hall press conference on Wednesday that, despite a decrease of $2.3 million dollars in revenue from the 2014–15 fiscal year, her budget proposal for the next fiscal year will not include tax increases. Instead, the mayor’s budget will account for the decreased revenue by cutting expenditures by $2.3 million. The drop in revenue is in part due to overestimates of earnings from building permit fees, particularly from the two new residential colleges, and reductions in state funding.

“We had to come up with an expense plan to mirror the revenue decrease,” Budget Chief Joe Clerkin said. “The expenditure side of the budget is always more complex [than the revenue side]. It’s a little more dynamic.”

Clerkin said that after receiving $7.6 million dollars from Yale last November in permit fees for the construction of the two new residential colleges, city officials increased projected permit fee revenue from $8 million to $10 million. However, Clerkin said, the number was lowered to $8.5 million while drafting the budget because the $10 million projection is unlikely to be met. Clerkin added that while the University’s payment boosted the city coffers, it was a one-time payment and the city does not expect additional revenue from Yale for the new colleges’ construction because the University paid its fees in full in the fall.

The city’s total revenue will also be impacted by lost state aid in the 2015–16 fiscal year. Clerkin said that while the state’s two major contributions — the Payment in Lieu of Taxes (PILOT) and Education Cost Sharing programs — would remain constant, the city would lose funding from Hartford in other, smaller categories that Clerkin did not specify. The PILOT program offers compensation to cities like New Haven that lose tax revenue to nontaxable properties, such as property owned by Yale and used for educational purposes. The Education Cost Sharing program offers aid to New Haven Public Schools.

City Hall spokesman Laurence Grotheer said Harp remains hopeful that the state legislature will elect to bolster PILOT funding during deliberations of Gov. Dannel Malloy’s proposal. He added that, after Harp’s experience deliberating 21 state budget proposals as a state senator, she is confident that circumstances will change in New Haven’s favor before Malloy’s proposal is finalized in June.

Grotheer said Harp is determined to balance the city budget without tax hikes to avoid burdening New Haven residents.

Clerkin said city officials were able to maintain tax rates due to $5 million in lingering savings from refinanced debts on the expenditure side of the budget. The Finance Department took advantage of lower interest rates in recent years to pay back debts, Clerkin said.

The city has also reduced projected spending on overtime pay by filling vacancies in the Fire Department and the Police Department, Clerkin said. The proposed budget also eliminates 10 positions in the Fire Department to cut additional spending.

Clerkin said that while the city’s net expenses were cut, the mayor’s plan includes several increased expenditures, including new hires to fill gaps in city government. The mayor’s plan accounts for 23 new positions across city departments, for a net increase of 13 in the number of city employees. The new city employees include five hires in the health department, four new employees in the public library system, one in information technology and a new assistant to the small business director, Jacqueline James.

“The new positions are a demonstration that the city is able to do more with less as the mayor promised,” Grotheer said.

Clerkin added that the budget proposal was viable without tax increases because the city had seen an increase in the tax collection rate since the last fiscal year from 97.7 to 98.2 percent. The higher rate would allow the city to maintain tax rates, Clerkin said, even though the city’s “grand list” — an aggregate sum of tax revenue — saw a decrease of close to 1 percent over the past year.

The next step in the budget process will be public hearings run by the Board of Alders Finance Committee, Downtown Alder Abby Roth said in an email to residents of Ward 7 Thursday evening. She added that although she is not a member of the committee, she will closely follow the discussions. The first public hearing will be followed by several budget workshops throughout March and April during which city departments will make presentations to the Board of Alders, Roth added. The board will vote on Harp’s proposal during a special budget meeting at 7 p.m. on May 26.

“Now it’s all within the purview of the alders,” Grotheer said.

Ward 1 Alder Sarah Eidelson ’12 said she expected a long deliberation process in the Board of Alders after Harp submits her proposal on March 1.

“The budget process is more than just the schedule though,” she said. “It really goes on all year long.”