With no good solutions, taxpayers will feel pain
In her recent meeting with the Municipal Accountability Review Board, Mayor Nancy Rossi sat in front of a panel that was neither sympathetic nor interested in nuance. If the city administration wants the $8 million in state aid that was not forthcoming after last year’s state budget it is looking for one of two things: broader cuts to eliminate the need for the $8 million, and/or “new revenue” to offset the aid. In other words, MARB is expecting the mayor and her administration to raise taxes.
The city included the $8 million in its current budget, passed in May of 2017 and in effect on July1, 2017. This budget is effective until June 30. The shortfall occurred when the General Assembly spent most of the spring and all of the summer attempting to come up with a state budget.
Each year the state alerts the 169 towns and cities the amount of money it could expect in various state aid packages. West Haven was told prior to the proposed budget of Mayor Edward M O’Brien in 2017 to expect $12. O’Brien thought it prudent to only include two-thirds of that amount, thus the $8 million.
As it turned out, the state was in no shape to hand out even that amount of money, and the budget has a built in shortfall because of it.
In a separate track, the city had a 12-year-old operating deficit that was increased over the four-year term of O’Brien as estimated revenues never equaled real expenditures. The $10 million-plus deficit that had contracted and increased over the years ballooned to more than $16 million.
O’Brien had always planned to pay off the deficit by means of bonding, but was unable to do that until his final year in office. In the meantime, the General Assembly passed a statute that put cities that bond for deficit reduction under the newly-constructed MARB.
The General Assembly’s imposing into West Haven’s finances was unknown – or unclear – until the ink was dry on the bonds that brought $25 million into the coffers for deficit reduction and some infrastructure repairs.
Rossi had her first meeting with MARB within 48 hours of her inauguration, and has since met with it each month. She put the $162.86 million package before MARB before she presented it to the City Council in March. MARB controls the $8 million infusion of cash the city can receive—and is expecting — but wants to see “structural changes” both to the expenditures and the revenue.
In brief terms, the panel wants the city to cut expenses and raise taxes.
The mayor is looking to make broader cuts to comply with the diktat, but the budget is now in the hands of the City Council for its six-week review. Any cuts would have to be made under charter, which requires a nine-vote supermajority for alterations on line-items on the 13-member council. This has been a hurdle too high for various councils over the years. This supermajority is also needed to raise the mill rate, which currently is the same as currently, 37.
The panel dangled the $8 million before the mayor at its recent meeting, saying if it didn’t get the “structural changes” it desired, the city would not get the money. The problem is simple, the $8 million for FY 2019 and possibility for FY 2020, will only fill a gap. The city must find a way to replace the money, or be faced with a similar shortfall two years hence.
The members of the state panel have given no real options. The city must either find a way to replace the $8 million or make newer cuts. The only way to replace the $8 million would be a tax hike either by the City Council or in the form of a supplemental tax increase. That increase would then be included in the next budget cycle for FY 2020.
Making further cuts will be painful, and raising taxes will be devastating. West Haven is bleeding residents now, and further increases will turn that flow into a deluge. The council and the mayor have a problem with no good solutions. The residents and taxpayers are in for more pain.