In about two months, Mayor Toni Harp will submit her proposal for the city’s annual budget to the Board of Alders for review. While the city’s finances have been closely scrutinized in the past, the latest monthly financial report suggests a slight improvement in the management of costs.
The Elm City is facing a crisis familiar to many of the state’s large cities: rising costs and limited sources of revenue. Last summer, the city undertook a historically large debt restructuring, freeing up cash to fuel the city’s functions. Now, as the most recent monthly report has shown the potential of an improvement and the Harp administration prepares to propose the budget for the next fiscal year — her proposal is due to the Board of Alders March 31 — questions on how New Haven can right its financial trajectory by minimizing traditionally high areas of expenditure have re-emerged.
“Preparations ahead of the mayor’s proposed budget are in their final stages,” mayoral spokesman Laurence Grotheer told the News.
At a January meeting of the city’s independent Financial Review and Audit Commission, Harp’s top staffers presented their plans for steadying the city’s finances. Controller Daryl Jones and Acting City Budget Director Michael Gormany told attendees that, among other things, the mayor would unveil a five-year plan alongside her proposed budget. The five-year plan, which Harp’s aides have referenced repeatedly in recent months, is designed to address longer-term and systemic issues.
Financial systematic problems include the costs of fire and police overtime as well as health care coverage. Although the cost of health care has risen steadily in recent years, the city’s most recent monthly financial report shows that in November, health care costs were actually lower than anticipated. The city is now hoping to hold health care spending flat, which the commission chair Mohit Agrawal GRD ’20 told the News would be “an extraordinary achievement” given the 5 to 8 percent annual growth in its cost.
Although the relatively low November 2018 health expenditure is likely partly due to chance — fewer city employees or their dependents have faced health issues that necessitate individual high dollar-value expenses — both the mayor and Agrawal claim that there also are structural reasons for the change that leave room for cautious optimism.
New Haven is self-insured, which means that after employees pay their share through deductibles, copayments and coinsurance, the city covers the entirety of any medical costs remaining. In 2018, however, the city began a number of programs designed to mitigate costs through preventative measures. These programs emphasize the management of chronic conditions and use annual physician visits to prevent and dampen the need for larger, more expensive procedures further down the line. The city has also increased the proportion of its employees in high-deductible plans.
“These and other changes are likely to have bent the cost curve,” Agrawal told the News. “If the city can control health costs for the coming years, the city’s budget pressures would be significantly lessened.”
Grotheer told the News that the initiatives are part of the Harp administration’s efforts to tackle high expenditures in a city where the sources of revenue are limited and unpredictable.
Last summer, Harp instituted an 11 percent tax hike and opted for a $160 million restructuring that has freed up cash in the short term but drags the city’s debt into the next decade. Budget planning for the current fiscal year faced the additional challenge of decreased funding from the state. Connecticut, which has struggled with its own budget issues, opted last year to bail out Hartford, which resulted in decreased funding to municipalities like New Haven.
Grotheer did not provide specifics on the status of the mayor’s proposed budget and the primary questions it will seek to address. But the level of funding from Hartford will again factor into how the budget will be determined. Newly inaugurated Gov. Ned Lamont SOM ’80 will release his budget for the state just days before New Haven releases its own, but Agrawal said the city’s budget will likely have to be decided without confirmation or knowledge of how the Connecticut legislature might amend Lamont’s proposal.
Lamont has supported cost-saving measures on the stump, and his prioritization of fiscal issues throughout the state has left some in New Haven optimistic.
“I hope, with [Lamont] in office, cities will be given their fair share of the pie and we won’t have to increase property taxes again,” Ward 1 Alder Hacibey Catalbasoglu ’19 said.
New Haven is Connecticut’s second most populated municipality.
Angela Xiao | firstname.lastname@example.org