New London’s difficult budget, but bright future
Imagine my pride when my first proposed budget as mayor for fiscal year 2016-17 required no tax increase. It was a goal inspired by four years of frustration working with onerous proposed tax increases. After six years on the New London City Council, two of those years as council president and four of those years serving on the Finance Committee, I was confident that taxes could be stabilized.
Imagine my disappointment when a year later, on April 1, 2017, after weeks of struggle and consultation, I found myself giving the council a proposed budget that required a 15 percent tax increase. What had changed?
State government’s fiscal meltdown, that’s what. Since the city’s budget must be adopted before the state budget is finalized, state municipal revenue must be estimated from the various budget proposals presented to the General Assembly.
For example, the governor’s proposed budget requires New London to pay $2.2 million toward the debt the state owes to the Teachers’ Retirement Fund. One month later, with the proposal having a lack of legislative support, that expense was dropped from the city’s budget, reducing the proposed tax increase by about one-third.
Lack of legilsative support also makes it irresponsible to budget for the governor’s proposal to require L+M Hospital to begin paying property taxes, revenue that the city sorely needs. Including that revenue in the city budget would eliminate a mill rate increase, but it’s not likely to materialize.
This guessing game will continue throughout the month of May, until New London’s deadline for adopting a budget on June 1 arrives. Our ability to further reduce the current proposed 10 percent tax increase prior to final adoption will in large part be determined by events in Hartford as the state’s budget process stumbles along. Of the current 10 percent tax increase, approximately half is based on educated guesses about the amount of state aid that will be lost.
The other expense drivers are increases in fixed costs, including $1 million in pension costs, $600,000 in debt service, and $600,000 in workers’ compensation and health insurance. The 6.85 percent increase in general government spending does not include any new programs, positions or administrative raises. The budget does attempt to maintain the current level of services after years of continually trimming expenditures, including cutting 57 employees to reduce the workforce from 307 to 250 in the last five years.
It is time we stopped punishing ourselves and begin fighting the dysfunctional property tax system that has left our city the number one distressed municipality in the state. We must demand that the General Assembly reform the property tax system that is strangling our city. With legislation introduced by New London State Rep. Chris Soto, I am focused on reforming the unfair laws that permit generous property tax exemptions to nonprofit institutions and unfairly forces 55 percent of the property owners in New London to underwrite the cost of city services to the other 45 percent.
We must also work together to support legislative initiatives that eliminate unfunded mandates and provide municipalities some means of revenue diversification to end the reliance on the property tax. My administration is already pursuing initiatives to increase shared services in areas like animal control and emergency dispatch.
I remain bullish on New London’s economic resurgence and committed to fulfilling my pledge to “end the cycle of precipitous tax increases” that have hampered growth. The city’s newly strengthened partnership with a rejuvenated development corporation (RCDA) has promising major projects in the pipeline and real prospects for significantly growing the grand list after years of stagnation. The first new, market rate apartment complex to be built in decades is currently under construction.
An expanding workforce at Electric Boat, the L+M/Yale-New Haven Hospital affiliation, the coming National Coast Guard Museum, the state’s investment in State Pier and our commercial port, and the success of our magnet school system are generating investment interest.
The difficulties of this budget cycle aside, New London’s future has never been brighter.
Michael Passero is the mayor of New London.
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