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New London Mayor Daryl Justin Finizio needs concessions from the city's fire and police unions or he is going to have to approve significant layoffs. The situation is the product of harsh fiscal realities, the budget the City Council handed the mayor and the legacy of shoddy budgeting in the closing days of the former council-manager form of government.
It is not unlike the situation Gov. Dannel P. Malloy faced when he arrived in office after his election in November 2010. He too said the alternatives were concessions or layoffs. Yet some critics are reacting with shock and amazement that the city's first strong mayor would resort to some hardball to get the budget balanced. If voters wanted governance that glosses over the problems, pushes them back to another day and shies from confrontation, they should have stuck with the council-manager system.
Though on a much smaller scale, in some ways the task confronting New London's new mayor is more difficult than that Gov. Malloy faced.
Everyone knew how bad the state's fiscal outlook was during the 2010 election. It was the primary topic in the campaign debate. New London's financial problems were not nearly as apparent. An audit that would show the prior fiscal year had finished $1.3 million in deficit was not yet complete. No one was talking during the election about the projected deficit the city faced in the current fiscal year, or about systemic overestimation of revenues, inflating of projected savings or the low-balling of expenses.
So New London's fiscal problems came as an unpleasant surprise both to the new administration and to the citizens. Following a series of early missteps by the mayor that eroded confidence, many dismissed his fiscal warnings as overstated and needlessly dramatic, when in fact they were largely on target.
Adding to the challenge was an administration and City Council trying to find their way through a new system of governance. With voters having opted to dump the city manager form of government, Mayor Finizio was the first chief elected executive in nearly a century with real authority and this the first council with less. Such a transition would have been difficult under the best of circumstances.
But the city is now well into that process. The council has approved a 2.11 mill tax increase, an 8.3 percent jump. That is a sizeable tax hike, but significantly below the 20 percent tax hike Mayor Finizio first proposed to maintain current staffing and services.
Why is there a tax increase and staff reductions? This is largely the product of lowered revenue projections and increased debt service. In fact, about 80 percent of the tax increase is attributed to those two factors, not increased spending. The city is losing $600,000 in state aid to distressed municipalities, faces a $500,000 increase in debt service and the administration has lowered its estimated tax collection rates to align with reality.
The spending increase approved by the council, which accounts for the other 20 percent of the tax hike, falls well below the level needed to pay for normal inflationary increases, pay raises and other contractual obligations.
The fire department budget was cut by 1.6 percent over the current fiscal year, to about $8 million, and the administration must find another 2 percent decrease mandated by the council. The police budget faces a $175,000 decrease, and is $600,000 below what the chief needed to maintain existing staffing.
The prospect of laying off 25 fire department employees, out of the 80 it has when fully staffed, is daunting, as is the potential layoff of 10 police officers. But because of unemployment costs, severance payments and the overtime that will result from reduced staffing, many layoffs are necessary for relatively modest savings.
Of course, there is a bit of brinkmanship in such matters. Mayor Finizio said a change in policy that would encourage retirements among older firefighters in return for moderation of contractual staffing requirements could achieve needed savings. The administration is also talking to police.
Bottom line, the mayor is doing the job for which voters elected him.