MARB nixing budget should be no surprise
The news that the Municipal Accountability Review Board rejected city’s approved budget ordinance should come as no surprise to anyone who has followed the financial machinations the city has experienced in the recent past. The plan proposed by Mayor Nancy Rossi, totaling $153.3 million, needed the approval of the state review board before going into effect.
The major reason was given by Mayor Rossi in a press release issued following the rejection: “The Municipal Accountability Board (MARB) voted down West Haven’s fiscal year 2020 budget on May 2, which was approved by the City Council in the wee hours of Wednesday morning. The reasons were that they wanted the budget to align better with the approved five-year spending plan that included cost-saving proposals such moving the city and Board of Education employees to the state healthcare plan.”
The MARB does want the city to move toward those cost-savings proposals, but part of the problem not mentioned by Rossi is keeping the city’s 36.26 mill rate intact. We wonder if the MARB was expecting a marginal increase in the first year of the plan. It must be remembered over the course of the plan, the city is expected – make that mandated – to raise its mill rate to 40 in order to create better cash flow. The transition to other health coverages could save the city millions.
Rossi’s assessment was one of miscommunication.
“The MARBs rejection of the budget appears to be a result of a communication issue. The board confirmed at the meeting they want the planned efficiency savings, OPEB Trust Fund, Health Care savings and an increased contingency included in the plan. The task of including these items will be pretty straight-forward and should not change the bottom line of the budget—the changes will be budget neutral,” she wrote.
We would not be surprised to see some type of increase in the city’s taxes in order to comply with the wishes of the MARB. It has been the contention of the panel’s members since it took over the city’s finances that taxes were too low to sustain the city’s budgetary needs, and that state funds needed to balance the budget over the next few years are contingent upon following the five-year plan. Failure to comply would result either in a Tier IV take-over by MARB, which would give it complete control over contracts and finances; and/or withholding of the funds, this year totaling $6 million.
Rossi’s attempt to keep the mill rate status quo was because the city was able to post a $3.1 million surplus in FY 2018, and project another surplus during the current year. While that is all well and good, the MARB is still looking for tax increases that will increase city revenues and wean it off state funds.
Some political critics of the mayor have called the attempt to keep the mill rate the same a political ploy in an election year. That is all together possible. In the rejection by MARB, any tax increase puts the onus not on the political leadership, but on the outside organization. In other words, in a year when she faces a Democratic primary in September, and/or a three-way race (former Mayor Edward O’Brien running as an independent) in November, she gains political cover for a tax hike.
Regardless of the reason, we fully expect that whatever adjustments are made in expenditures and insurance coverage will be accompanied by an increase in the mill rate. Unless and until the city is able to increase its tax base to the point that taxes will be able to come down, we face the dilemma of cutting services and increasing taxes to give the city the funds it needs to operate.