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Hartford Projects Huge Budget Deficits For Years To Come

By JENNA CARLESSO

March 04, 2013

HARTFORD —— As the city struggles to close a projected $70 million gap in next year's budget, early projections show that deficits will continue to worsen in coming years, to as much as $82 million in 2016-17.

Late last month, officials said the city faces a $9.4 million shortfall in this year's $540 million budget, and a $70 million deficit in 2013-14 — a gap equal to about 12 percent of annual spending.

The current deficit stems mostly from money owed to the city treasurer for pension contributions that are not accounted for in the budget, and next year's is due in large part to the rising cost of benefits and pension contributions, as well as a decrease in state aid.

A budget forecast prepared by Jose Sanchez, the director of management, budget and grants, shows the city's deficit ballooning to roughly $72 million in 2014-15, to $77.4 million in 2015-16 and to $82.3 million in 2016-17.

Those figures, the most recent calculations available, account for an $18 million decrease in state aid in 2013-14, another $5 million decrease in 2014-15, and additional $1 million decreases in 2015-16 and 2016-17, Sanchez said.

The projections for 2014-15 through 2016-17 don't account for any additional cuts the legislature might make to municipal aid and don't factor in the governor's proposal to exempt property taxes on motor vehicles valued at or below $28,571, which could cost the city $18.7 million more in revenue a year, Sanchez said.

The $70 million deficit projection for 2013-14, however, does factor in most of the municipal aid changes proposed by Gov. Dannel P. Malloy. Without the governor's proposal, the city is still projecting a $58.6 million deficit for next fiscal year, equal to a 10 percent shortfall in annual spending.

Mayor Pedro Segarra and city officials are still reviewing options for closing next year's gap. Layoffs and increases in the city's tax rate have not been ruled out, Sanchez has said.

In addition to the $9.4 million that the city owes for pension contributions, officials are still waiting on $12.2 million in reimbursements from the state for school reconstruction projects. Though city leaders have said they are confident they will get the money, the shortfall could grow to $21.6 million if the reimbursements aren't received.

City officials said last year they were owed about $50 million from the state in reimbursements for school construction projects — some of which date from 2007, 2008 and 2009 — but requests for the reimbursements were never made.

The city said at the time it expected about $45 million in reimbursements, which it would spread over several fiscal years. But at a recent public hearing, Saundra Kee Borges, the city's interim chief operating officer, said that number had shrunk to $27.6 million.

"We're finding that some of these expenses we thought to be reimbursable may not be," Sanchez said. The reimbursements stem from 15 to 20 school construction projects, he said.

Information on the status of the reimbursements was not available from the state Monday.

Malloy's proposed 2013-14 budget eliminates reimbursements to cities and towns — payments in lieu of taxes — for state-owned property on which municipalities can't collect taxes. The budget redistributes that money into the state's education cost sharing program, which pays for cities' and towns' education initiatives.

Sanchez said that although Malloy's plan shifts the money to education cost sharing, Hartford's share of the PILOT reimbursements — $13.5 million — would remain in the city's operating budget.

City leaders have begun to explore options for offsetting the deficits, including restructuring debt, delaying hiring for several vacant positions and union concessions.

Last year, Segarra was counting on $1 million in union givebacks to balance his budget. He didn't reach that goal, and instead laid off 14 city employees in September.

No target has been set for how much the city hopes to achieve in concessions next year, Sanchez said, but it will likely be more than $1 million.

Officials are also looking to sell off city-owned property to help close the deficits.

In the 2010-11 fiscal year, the city brought in about $1.8 million through the sale of its properties. It brought in $20,000 in 2011-12, and $1.5 million so far in 2012-13, according to the city's finance department.

Sanchez said that if the city doesn't find the money to cover the $9.4 million shortfall for this year, it would probably have to tap its rainy day fund, which has a balance of about $26 million.

While officials consider how to close the gaps, residents underscored the need to maintain some programs and services, like those provided by the library, the public works department and police.

Asia Cook, 22, said she's benefited from the career assistance programs run by the city's public library, and she hopes they continue. Cook, who lives on Ward Street, received assistance in crafting her resume and even earned a certificate in customer service through the programs. She said she visits the library about four times a week.

"I think Hartford has a lot of positive things going for people if they use them properly," she said.

Grace Claire, who lives in the city's West End, said job training programs and services for the homeless are crucial.

"It would be a fantastic thing to reduce the amount of homeless people in Hartford," she said.

Hyacinth Yennie, a South End resident and head of the Maple Avenue Revitalization group, said the city needs to take a close look at its top-level staffing and cut any unnecessary positions.

"Instead of having an assistant to the assistant to the assistant, we need to get rid of some of those assistants," she said. "Do we need certain people or could we share staff for certain things? We also have people not doing their jobs and making big salaries. Who's going to make sure we hold those people accountable?"

Yennie said the city could use more public works staff, such as street cleaners, and public safety personnel.

"We need people who can actually do the work to make our city a better place," she said.