The mayor has the ability to withhold funding for certain line items if the city is facing a projected deficit, according to Law Director Jeffrey Londregan.
Londregan says he was asked to give an opinion on whether Mayor Daryl Finizio has the ability to withhold certain payments, particularly municipal funding for New London Main Street and the fourth quarter municipal payment to the Public Library of New London.
The Finance Department has been tracking spending and revenue collection in the current fiscal year in an effort not to overrun the budget approved on Oct. 9. In its last projection, the department estimated a in the current fiscal year due to overspending or revenue shortfalls.
Finance Director Jeff Smith has said the city could realize up to $1.7 million in savings to cover the deficit, including drawing on the debt service fund and additional savings in some departments and funds. Smith said about $200,000 of this savings could result from stopping municipal contributions to non-profits and the Public Library of New London, but said this step should only be taken as a “last resort.”
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In the memo, Londregan said the mayor “has the authority to withhold payments of discretionary line items in an appropriation ordinance when the city is facing a deficit (as confirmed by the Finance Department) for a subject fiscal year.” He said the City Council can counter this action by requesting the anticipated shortfall figure from the mayor and finance director and passing a special appropriation from the fund balance to cover the deficit.
Londregan says such a step is necessary because the City Charter requires that the mayor keep the city from running a deficit and the mayor should have the flexibility to address changes to the budget such as revenue shortfalls.
“He must be able to prioritize spending between contractually obligated responsibilities (i.e. union contracts) and what can be considered discretionary spending,” Londregan says. “If the mayor did not have the authority to prioritize funding within the appropriation budget, he would not be able to carry out his charge of seeing ‘that the city does not, except in case of unforeseeable emergency, incur a deficit.’”
A recent audit showed a depletion of the general fund from about $4,979,248 at the beginning of the 2012 fiscal year to $1,262,989 at the end.
Council President Michael Passero previously said he did not think cuts to the library’s funding should be under consideration, saying that it could lead to the library closing for its last quarter. He also said he thought such an action shouldn’t “happen by fiat.”
Londregan said he agreed with Passero’s assertion that the mayor needs Council approval in order to not spend the full amount of a line item’s appropriation and instead spend some of the funds elsewhere. However, Londregan said there is a “clear exception to this rule” if the city is facing a deficit.
Londregan said that if the Council had to approve the withholding of funds if the city was facing a deficit, the mayor’s mandate to avoid a deficit would be rendered moot. He said this could also “result in the illogical outcome of having the Council require the mayor to spend money and forcing the city to incur a deficit.”
The Council accepted the memo for the record but took no action on it.