As the wealth disparity between the University and its home city grows, New Haven Mayor Justin Elicker and University President Peter Salovey are locked in a debate over Yale’s financial responsibility to the Elm City.
The city is currently facing a budget crisis and needs to come up with a projected $66 million in the 2021-22 fiscal year to avoid drastically cutting its city services, Elicker said at a Thursday press conference. Many of the city’s budget problems can be attributed to a high number of workers asking for pension contributions and a decrease in revenue brought on by the pandemic, he added. Elicker has long been critical of Yale’s tax-exempt status and campaigned on a platform of increasing the University’s voluntary contributions to the city by more than four times.
Salovey affirmed that Yale wants to work in concert with its home city and said that payments to the city will increase, but stopped short of promising a specific amount or timeline. Yale’s voluntary contribution was $13 million this year, up $1 million from the previous year.
“We are number one in the country in the size of the voluntary payment we make to our host city. We are number one,” Salovey told the News. “And I’m not saying we can’t do more. But what I am saying is these budget problems are structural and deep. And they need to be solved in a far more complex way, in a far more sustainable way than just the university every year having to write a bigger and bigger check.”
In the press conference, Elicker claimed that it would be nearly impossible for the city to make up its deficit without Yale or the state government coming to its aid. According to Elicker, the tax hike required on New Haven residents to come up with the projected $66 million would be over 20 percent, a number that he said is “not a viable option.”
The mayor said that next year’s budget deficit is driven by systemic financial challenges the city faces, including pension costs, debt service and other fixed costs. The city of New Haven’s fiscal years run from July 1 to June 30. The budget deficit for the city’s current fiscal year, which runs from July 2020 to June 2021, was over $50 million less than the projected $66 million for the year that will begin in July 2021. He also said the city has exhausted its ability to cut its programs, citing the fact that over 50 jobs were cut from the New Haven Police Department in the last year as an example.
He said providing aid is the University’s ethical responsibility.
“At this point, we’re cutting bone,” Elicker said. “This [aid] is in the University’s self interest. We talk a lot about income inequality and systemic racism. Now is the time for the university to make a strong statement about where it stands on these issues.”
In an interview with the News, Salovey said he first heard the full extent of the budget crisis — the projected $66 million figure, on Thursday, the day of the press conference. He and Elicker spoke last week and the week before that, Salovey said.
Elicker declined to comment on whether he and Salovey had discussed details of the city’s finances in their conversations.
In the 2020-2021 fiscal year, Yale paid $13 million to New Haven. This is the largest voluntary payment that a university has made to its home city, Salovey said. Additionally, the University pays yearly permitting fees, real estate taxes on non-academic buildings and high school students’ scholarships through the New Haven Promise organization.
Elicker said that while the city is grateful for Yale’s current contributions, looking at the numbers, the inequality is undeniable. He cited that the University has a $4 billion operational budget to educate 12,000 students, and the city is spending around $600 million on its 130,000 residents. This means Yale is spending $330,000 per student, while the city is able to spend $4,600 per resident.
“We want the University to be successful,” Elicker said. “But something is just not right.”
Officials from Yale and New Haven are in talks about how Yale can help the city, Salovey said. But it’s too early in the process to discuss specifics, he added. Elicker said he was “cautiously optimistic” after recent talks.
Salovey did not directly respond to repeated requests over whether the University would increase its voluntary contribution to the city, as it has gradually done over the past decade. He said that there is “no doubt” the contribution will be greater in the future, but he did not share a specific timeline for increasing it.
Instead, he mentioned how the state government could allot more money to New Haven. The state legislature is considering restructuring the Payment in Lieu of Taxes program, or PILOT. Senate President Pro Tem Martin Looney of New Haven has introduced a proposal that would increase funding for the program, which currently provides New Haven around one third of its promised allocation.
Sixty percent of property in New Haven is nontaxable, Elicker has said, and under the PILOT program, the city is supposed to have 77 percent of this reimbursed by the state. But according to Elicker, New Haven receives only about 26 percent. He said Looney’s current proposal would increase the percentage each city receives based “on need.” New Haven could receive an additional $43.6 million per year from the state if the proposal is enacted.
Elicker said his team has paid close attention to this proposal. He said he recently sent a letter to Connecticut Governor Ned Lamont that was signed by 27 other mayors and first selectmen in support of the plan.
“The plan has bipartisan support,” Elicker said. “There is potential here for the university, the state and the city to all do something big here and bet on New Haven’s future. The question is whether or not all parties are willing to collaborate to do so. The city is certainly willing to do so.”
Jack Callahan, senior vice president of operations and member of a committee assessing how Yale can work with New Haven, said that as someone who grew up in New Haven, he gets “uncomfortable” when people say the city’s problems are caused by Yale.
University officials want to work more closely with New Haven, Callahan said in an early January interview with the News. They can collaborate on economic development, hiring New Haven residents to work at the University and on sustainability initiatives.
Callahan said the University is willing to have its experts give advice to New Haven on how to navigate the city’s pension-related challenges. There may be other ways to help monetarily, he said.
Additionally, Callahan said that the University has helped the city by continuing to pay all of its staff — many are New Haven residents — during the pandemic and supporting its retail tenants.
Once the University takes care of the Yale-connected community, it will pass off additional COVID-19 resources to New Haven, Salovey said. Additionally, Yale set up a COVID-19 relief fund for the city and provided rooms to first responders — after initially refusing to do so.
Elicker said there is no doubt Yale does many good things for New Haven, but the problem has reached the point that if immediate action is not taken, it will be a “disaster” for the city.
“We’re very appreciative of the things Yale does in New Haven, we definitely need financial assistance in order to provide the basic needs New Haven residents deserve,” Elicker said. “The University needs to play a significant role in helping us address that challenge.”
For Elicker, one of the central aspects of his campaign was a promise for $50 million in increased contribution from the University. Looking at the situation a year a half later, he said this figure seemed “reasonable and attainable.”
He said the question is whether or not the University will cooperate, adding that “there are some in the city that think Yale should be giving upwards of $150 million. We’re asking for a drop in the bucket.”
The city of New Haven is home to 130,000 residents.
Thomas Birmingham | firstname.lastname@example.org
Rose Horowitch | email@example.com
Correction, Feb. 4: A previous version of this story cited Elicker as saying next year’s budget deficit is “largely driven” by the pandemic. This year’s deficit is driven pandemic-related issues, but next year’s is driven by systemic financial challenges in the city. Additionally, the city cut more than 50 jobs from its police department, not 50.
Clarification, Feb. 4: The story has been updated to clarify in all references that the $66 million is a projected figure.