West Haven and high taxes: a short history

By Bill Riccio, Jr.
Voice Editor

If I had to admit it, the number of times this writer has gone onto the West Haven Voice Facebook page can be counted on the fingers of one hand. While I do have a Facebook account, and do peruse it occasionally – even to the point of making a comment or two – most of what is on the site is not very interesting. I have no interest in people’s day-to-day goings on, and don’t understand the compulsion to let everyone else know.

As far as the Voice page, I don’t go on because most of the comments about this or that article tend to be thoughtless venting of the “bumper sticker” variety. People want to make snide comments without much to back it up. Such is the state of most social media “conversation” for lack of a better term. Most people make hit-and-run comments usually based on their individual biases. So, I don’t go on often.

I did happen by it a few days ago, and saw a comment that this writer should stop with the “fascist” editorials and talk about why taxes are so high in West Haven. “Fascist” is a term that few understand except as an epithet. It is like “racist.” It is meant to shutdown conversation and pigeon-hole the opponent: Alinsky’s “Rule No. 1.”

Fascism seems like a good topic, but that’s for another day. Anyone who has followed this newspaper for an amount of time knows we’ve discussed why taxes are so high in West Haven. It didn’t happen overnight, and it isn’t going to rectify itself anytime soon. For those who might not have heard the story, here’s the long and short of it.

To understand the circumstances leading up to the current situation, you have to go back all the way to 1973. Connecticut before the summer of that year was a destination state. The “arsenal of the union” had General Dynamics, various subsidiary companies, Sikorsky’s and gun manufacturers. From Ensign-Bickford to Colt, to Winchester’s the state’s manufacturing base was supplying the military. And, for good measure we had General Electric and Stanley. Our workforce was considered the tops.

The Israeli-Arab conflict of 1973 brought about the embargo of oil to the United States, which tripled cost and brought about gas lines stretching for
miles. Gasoline, which at one time was about 30 cents a gallon, went up to more than a dollar and beyond. OPEC, the Organization of Petroleum exporting Countries was mostly Arab or Muslim, and they hated Israel, our ally. We supported the Israelis in that war. The US had stopped most o its domestic oil production in favor of overseas. The reasons for that don’t matter for our purposes.

That summer set in motion a myriad of circumstances. While Connecticut and the Northeast, along with the Midwest were manufacturing hubs, the fact they were in the northern tier – where winters meant use of oil – made costs skyrocket. Then there were the union contracts that had been carved out in the good years with high salaries. Businesses looked elsewhere: warmer climates and non-union labor. They went south.

For the next two decades, manufacturing left the state. West Haven was clobbered with the loss of Armstrong Rubber Company, which closed in 1981. That was our biggest employer. Bayer had a plant up on Morgan Lane,
and was our second-biggest employer. That’s when the second wave of problems hit. But there was another problem. In the late 1980s, even
with the loss of Armstrong, the city was having a boom from about 1983-88. People were moving into the city and buying houses. The housing bubble of the late 1980s was writ large in West Haven. When it collapsed – almost overnight – property values plunged to well below market value. On
one day, properties on the same street were going up in value by tens of thousands of dollars. The next, they were worth about 20 percent of what they were asking. Our tax base, always too resident heavy, plummeted with it.

It created a situation where people were buying properties by maxing out their credit cards. Hundreds of condominiums were sold pennies on
the dollar. Those who could afford it moved out of town. The city became owned by absentee landlords: a problem we have today.

That began our fiscal problems: 1988. The next year was an election year. The administration of Azelio “Sal” Guerra sought to keep tax rates status quo. Two things happened. One in an attempt to build on the tax base, the
city wanted to sell Quigley Stadium to a developer. That brought a protest from Allingtown and became an election issue that was to dog Guerra.
Also, it was shown that in the aftermath of the housing collapse, the city had put only a paltry amount in the contingency fund. A bad audit
was a problem for Guerra.

Clemente Evangeliste, a trucking company owner ran on the GOP ticket. Not really a Republican, he was able to squeak out a win over Guerra on the slogan, “We have to run the city like a business.” Evangeliste had little administrative experience and had a Democratic-controlled City Council. It was a rocky two years, capped off by a budget battle that was to rock the city. The budget presented double-counted state funding, and had other projections that didn’t jibe out. Despite attempts by the GOP minority to get the council to make the necessary changes, politics prevailed; the budget failed by an 8-5 vote (party line), and that, by charter, meant the proposed budget would pass by default.

Evangeliste did not win reelection in 1991, only the second one-term mayor in our history, so far. But that budget did what everyone knew it would: put the city into big time debt. The state was called in by newly elected H. Richard Borer, Jr., and the city was under state receivership for three years. Contracts were altered. The city had no control over its finances, and stayed that way, with some supervision after 1994.

In the meantime, globalism, what George H.W. Bush called the “New World Order,” was to hurt the city even more. Bayer eventually left the city, taking with it hundreds of thousands of dollars in taxes, and leaving hundreds without jobs. The reason: high taxes, primarily, but as with all industries, if they weren’t going south, they were going south of the border or across the seas. Connecticut’s once vaunted manufacturing base was whittled down. It was no longer a destination state. It was the opposite.

For the next decade or so, the city would try to bring in industry or commerce, but the tax situation was always the biggest hurdle. With only residential and personal property taxes as the base, it wasn’t possible to bring taxes down. Eventually, the city made things worse by trying to “borrow” its way into prosperity. The city trebled its bonding and this maneuver did little except forestall the inevitable. Borer lost a tight primary to John Picard, and Picard won the general election.

The city’s bonding was a big issue along with ineffective attempts to rebuild our commercial tax base. Borer had a plan to redesign each of the city’s
gateways, but there was little interest. The project that was to become the Haven was announced in September of 1997, it languished until 2014, when the current project was announced. Borer was successful in finally getting a commercial redesign on Sawmill Road, but that took almost eight years before it moved forward.

Then came another body blow. Picard’s administration found a $10.4 million shortfall in the city’s finances. He had two choices, bring the state back in asking for a review board like 1991, or try something else. His “something else” was attempt to pay off the deficit incrementally with each budget, while paying off some of the bonding debt to make sure our debt service line item didn’t skew expenditures.

It almost worked.

Things seemed to be working with the debt reduction, and he actually got it down to about $4 million. However, the Great Recession of 2008 stymied the city’s ability to continue, and the debt waxed and waned over the next few years. Like his predecessors, the tax rate was kept at a number that would only pay for the contractual increases and those of the school system.

Meanwhile, the city’s Grand List, the list of taxable property, took hits along with everyone else in the Northeast. For the first time since 1988, the Grand List actually contracted. In a city already on the brink of insolvency this was another hurdle to overcome.

Picard lost his re-election bid after three terms to Edward M. O’Brien. The high school redesign and the ham-handed way school technical education was to be phase out was the issue that was pivotal.

Picard had attempted as did his predecessor to bring redevelopment into the city. The Water Street Project, renamed “West River Crossing,” never panned out. A one-lot sale of a Water Street property was announced, but never materialized. He did, however, begin talks with developers about the Haven. His successor, O’Brien, was able to finalize
that deal in 2014.

Meanwhile, the city’s budget deficit languished in the background. O’Brien was in favor of bonding to get rid of the deficit, saying it is inhibiting the city’s ability to bring interested developers. Our bond rating, which had been just above junk-bond status, continued in its own right to languish.The Haven project, mired by the need to make deals with several homeowners, and facing lawsuits and pushback, is only now beginning the work of demolition.

This project, it was hoped, would bring in permit fees and tax money by O’Brien. But things didn’t work out that way.
O’Brien did finally get the City Council to agree to bond to pay off the deficit after years of acrimony. But, in keeping with the city’s penchant for combining happenstance with badly timed decision-making, the General Assembly passed a law putting municipalities under state control for a three year period. Originally aimed at Hartford, West Haven came under the rubric when the bond was approved.

In the final weeks of his administration, O’Brien and the City Council passed a $25 million bond issue to cover more than $16 million of the deficit, and allow for some infrastructure repair.

The new law never, it seems, came into the conversation. When Mayor Nancy Rossi took office in December 2017, she was summoned to Hartford to meet the Municipal Accountability Review Board (MARB), which oversees city finances to this day.

So, why are the city’s taxes so high? A combination of location, the northeast; happenstance, erosion of the tax base through various extrinsic circumstances outside anyone’s control; bad decisions, from passing a deficit budget, to bonding too much, to artificially keeping tax rates low, to bonding the deficit when we did.