Despite grim financial predictions when the pandemic took hold in March, New Haven officials ended this fiscal year with a measured celebration; the Elm City’s budget boasts a $1.9 million surplus.
That surplus represents the combined surpluses and deficits of New Haven’s general, medical, worker’s compensation and litigation funds. When the city ends a fiscal year on the right side of zero, any extra money goes into the rainy day fund, which the city can use in a crisis to avoid having to sell public property. Thanks to this year’s surplus, the rainy day fund increased from $15.7 to $17.6 million.
But this doesn’t mean that New Haven won’t have to worry about money in the coming year, Mayor Justin Elicker said at a Tuesday press conference — nor does it allow the city to relax the strict cost control measures and sweeping departmental cuts that characterized this year’s budget negotiations.
“Overall, we are still facing a very, very challenging situation in this city financially,” Elicker said. “Even though there’s a little bit of good news, we eliminated over 100 positions in our budget, eliminated a number of programs and cut across the city in this coming fiscal year and we continue to anticipate a lot of financial challenges.”
And, the mayor noted, this year’s budget could contain a $2.5 million hole if Yale doesn’t increase its voluntary contribution to the Board of Alders’ June proposal, which they codified in the budget agreement without a guarantee from the University.
Still, Elicker said, city departments have demonstrated their ability to manage New Haven’s budget in a year that has ravaged municipal finances across Connecticut and the country. In particular, he commended the tax collection, building permit and parking meter offices for ramping up revenue-raising operations after brief closures in the early spring. Police and public schools, Elicker said, drove expenditure savings that balanced out revenue shortfalls.
Those combined efforts reduced the general fund deficit from a predicted $15.3 million to just $650,000.
Revenues — while still falling short of last year’s original budget predictions — performed significantly better than predicted six months ago. New Haven saw a $6.5 million revenue shortfall at the end of this fiscal year, as compared to a $14.9 million prediction in March, and a more modest $8.5 million in June.
That revenue shortfall, budget director Michael Gormany said, only slightly exceeded the city’s overall expenditure savings, which rang in at $5.9 million. City officials in March projected spending $400,000 more than the overall budget and predicted a modest $800,000 in savings in June.
On the expenditure side, New Haven police spent $2.6 million less than allocated last year and the city’s public schools ended the fiscal year in the black, with a modest surplus of $865 — a far cry from the $8.3 million deficit NHPS forecasted in the spring.
Phillip Penn, NHPS’s chief financial officer, attributed the savings to COVID-19 school closures during the fourth quarter of the fiscal year. Without students in classrooms, he said, the district saved a significant sum on custodial and maintenance costs.
Other savings outside of the general fund are more puzzling, Elicker said on Tuesday. For example — even during the public health crisis — the city’s medical fund, which covers public employees’ healthcare, ended the fiscal year with a $2.2 million surplus.
“People were spending a lot more time at home,” Elicker said. “People were not getting sick as much because they weren’t interacting with people.”
The budget for this fiscal year raised property taxes by around two percent.
Mackenzie Hawkins | firstname.lastname@example.org