While the City Council looks over the mayor’s proposed $162.86 million budget, its work is under the final scrutiny of the Municipal Accountability Review Board (MARB), which has the power to veto the work the council completes on May 3. Empaneled when the city bonded to liquidate its $16.8 million operating deficit, MARB is making sure the city makes “structural changes” to the way it budgets, and the way it gauges revenue.
At issue is an $8 million grant that would plug a gap that was caused when the General Assembly failed to pass a budget until the fall of 2017. An expected combination of revenue never materialized, putting the city further into the red. The problem can be eliminated with the state grant this year and next, but there are strings attached.
“The challenge for the City Council is to make significant changes to a budget that is lean to begin with. The MARB’s expectations is that we need to bring our structural deficit (approximately $9.3 million) into balance over the next 3-5 years,” said City Council chairman Ron Quagliani (D-atlarge) this wee. “(That) would require us to start closing the hole this year by $2-$3 million, all while continuing to provide appropriate services to our community.”
Time is not on the side of the council. By charter it must pass a budget ordinance by the first Thursday in May, this year May 3. But the charter also requires a nine-vote supermajority of the 13 members to pass any revision of the budget as proposed by Mayor Nancy Rossi.
Currently, the council is in the strict review process, according to Quagliani.
“We are currently meeting with department heads to review their individual budgets. The council has set aside May 2 and May 3 for deliberations. Nine votes are required for each change to the mayor’s budget,” he said.
Another dictum by the MARB is that the city not structure its new package so that the entire state grant be expected, according to Quagliani.
“The MARB has been very clear that it wants to see significant structural changes to the Mayor’s Recommended Budget that will reduce the reliance on restructuring funds,” Quagliani said.. “The MARB stated in its April 19 letter that ‘the FY2019 budget should contain actions as are necessary to limit the need for restructuring funds to $6.0 million, or $7.0 million provided that the budget makes adequate accommodation of the anticipated deficit for FY2017.’ That would require the Council to fill a $2 – $3 million gap in the Mayor’s Recommended Budget.”
The council and the city are not acting blindly, according to the council chairman.
“The MARB has sent guidance and a list of expectations and action items to the mayor, superintendent, and me as chairman of the council that I disseminated to all Council members,” he said.
Getting the nine votes necessary to make a revision to the budget has been a tough road for past councils. If the changes are not made, MARB has the final word.
“The MARB has authority to reject the budget and has stated that they would if substantial changes are not made. I am talking with the MARB liaison on how this would be handled on a procedural basis should the MARB reject our adopted budget and require additional changes,” Quagliani said.
There has been talk of alterations after the budget is authorized, and even of a supplemental tax by the MARB itself. Quagliani said it’s too early in the process to even contemplate such measures.
One way or other, the MARB is indicating the city has to rely less on state funds and more “revenue streams.” When asked what new “revenue streams” can be tapped Quagliani said the options are limited.
“Municipal revenue is typically in the form of grants, fees, and taxes. Increased revenue by taxes occurs either by growing the grand list and/or raising the mill rate. The council has not taken any action to increase the mill rate thus far,” he said.
Mayor Rossi, meanwhile, said she too is working on revisions to present to the council
“Currently I am working on an amended budget to present to the City Council which will include additional cuts. The budget will provide structural changes that are necessary to reduce current expenditures and provide a sustainable plan for future budgets. Part of my plan is to renegotiation all of the union contracts that I inherited and look for real changes that will reduce our short and long term labor costs. I look forward to working with the City Council members to produce a budget that will put the city on a path to fiscal responsibility and accountability,” she said.
8. General comments.