Mayor Nancy R. Rossi presented a draft of the city’s five-year recovery plan to the state Municipal Accountability Review Board on June 7 in Hartford.
The draft plan, which accounts for the city, Water Pollution Control Plant and City of West Haven Fire Department Allingtown, has not been approved by the MARB or the City Council and is the “worst-case scenario,” Rossi said.
The draft plan includes a request from West Haven to apply for $8 million in state restructuring funding for the city’s fiscal year 2018 budget and the amounts outlined in its five-year recovery plan.
According to Rossi’s letter to the MARB introducing the draft plan, the city will reduce its reliance on state funding through government reorganization, economic development and budget reform. The five-year plan is balanced with the reliance on state restructuring money gradually decreasing.
Rossi said that although the draft plan includes additional tax increases for the years after 2019, the increases are assumptions that will be modified to include economic development and operating efficiencies, as well as a new health care plan for city employees.
“The five-year draft plan is a work in progress,” Rossi said. “Nothing has been set in stone, and everything possible will be done to lower or eliminate the tax increases.”
The city has been dealing with a deficit since 2006, when the audit was restated and a multimillion-dollar surplus in the general fund turned into a multimillion-dollar deficit.
Since 2013, however, the deficit has gone into a “downward spiral” from a $7.8 million general fund deficit to an $18.1 million deficit as of June 30, 2017.
According to Rossi’s letter, a deficit bonding package was executed in November 2017, before she took office, with the promise of a balanced budget. The soon-to-be-released audit, however, will show a $1.4 million deficit for the year that ended June 30, 2017, leaving the city with an executed, one-time deficit bonding package with a $1.4 million deficit that needs to be addressed.
The city’s existing health care plan has also contributed to the deficit.
“We will work together with a consultant and our unions to make an informed decision regarding a new path for a health care plan that will be a good plan for our employees but also cost effective for our taxpayers,” Rossi said.
Currently with inflation, Rossi said the health care line item will increase over five years to nearly $4 million, an increase of 8.4 percent per year.
At Rossi’s meeting with the MARB, Chairman Benjamin Barnes said, “I would only add that if there was one area in the city of West Haven’s budget that you could quickly identify as being a source of budget problems over the years, it has been their health insurance costs.”
Barnes later added, “Health care for active and retired employees has bedeviled West Haven, and so the significant progress on that is heartening and appropriate.”
The five-year draft plan includes $1.75 million for deficit reduction, per the MARB resolution, in the fiscal 2017 budget.
During the MARB meeting, board member Thomas Hamilton said: “I was previously chair of the Municipal Finance Advisory Commission, which West Haven has a long history with the state of Connecticut and has a long history, unfortunately, of having difficult financial operations.
“West Haven had carried an operating budget deficit of some, roughly $15 million for more than 10 years, despite a state law that said you have to extinguish any deficit over the next fiscal year and despite repeated — sort of — admonitions from the commission that I was on, which again is the Municipal Finance Advisory Commission. I put the emphasis on ‘advisory’ because the powers of that commission are rather limited, and so the commission could make recommendations but could not compel change in the way that West Haven put its budgets together. So there is some history here that does give me pause for concern. With that said, I think we have absolutely seen good faith from the mayor here and from her new finance person that she’s brought in.”
Hamilton, who was West Haven’s finance director from the early to mid-1990s, later added: “Frankly, part of the problem in the past — in my view — has been just some lack of political will to make tough decisions. If the city is willing to make some tough decisions on the spending side of the budget as well as willing to make some tough decisions in terms of being willing to adjust the mill rate as necessary to maintain a balanced budget, then I think West Haven can get to where they need to get to.”
Barnes concurred with Hamilton, saying: “I’ve been at those subcommittee (meetings). I agree with Tom.”
View the five-year recovery plan at http://www.cityofwesthaven.com/DocumentCenter/View/1428/Draft-Five-Year-Recovery-Plan-PDF.
Watch the June 7 meeting of the MARB at http://www.ctn.state.ct.us/ctnplayer.asp?odID=15366.