New London Facing $12 Million Deficit, Mayor Says

A freeze on hiring non-essential employees and an analysis of whether some city assets should be sold are among the steps that will be taken to close an estimated $12 million budget gap, Mayor Daryl Finizio said on Friday.

Finizio made the announcement at an event initially posted as a special City Council meeting among himself, Chief Administrative Officer Jane Glover, Finance Director Jeff Smith, Law Director Jeff Londregan, and councilors “to discuss the potential purchase and sale of real estate by the city of New London.” Finizio instead met with the councilors individually and in small groups to brief them on the budget issue.

Finizio said that prior to taking office, he was concerned about the estimates in the approximately —which includes $39.8 million for the —and asked all departments to make an assessment of their finances and report them to Smith. Finizio said the school district, which manages its own budget, is not affected by this deficit.

“After initial reports showed irregularities and uncertainties, the city’s financial advisors and auditors were called in to make a full assessment,” he said. “That assessment was concluded this week.”

Shortfalls and overspending

Smith said the budget overestimated revenues by about $500,000 in taxes and property, $373,000 in operating transfers, $185,000 in solid waste fees, and $175,000 from special revenue services. He said that some departments are expected to overspend their budgets, including $569,000 by the , $544,000 by the , and $180,000 by the City Manager’s Office.

“Let me be very clear on this. We call them over-expenditures, over the budget,” said Smith. “They may be over-expenditures or it might be really the fact that we under-budgeted these expenditures to begin with.”

Smith said the numbers were not available until the end of December. He said the shortfalls would reduce the approximately $6 million fund balance by $4.3 or $4.4 million by the end of the fiscal year.

Actions in response

Finizio said he has established a hiring freeze, effective immediately, for all municipal positions deemed non-essential. According to a memo from Personnel Coordinator Bernadette Welch to Finizio, the positions considered essential are the assistant city clerk and records technician—whose hires Finizio —as well as the deputy fire chief, deputy police chief, and one of two vacant police captain positions.

Finizio said the city will also look to restructure its debt; that department heads have been asked to assess savings in their departments, including possible staffing cuts; and that Glover will make a full analysis of all available municipal resources, including the possible sale of city assets.

“There is no specific sale planned of any specific property at this time,” said Finizio.

Asked about , Finizio referred to his past position on the property. Voters that would have sold about half of the park to the , and Finizio spoke out against the sale during his campaign.

Finizio said $12 million is needed to both close the deficit and restore the fund balance to the mandated 8.3 percent of the budget. He said the city will actively seek methods to close the gap by the end of the fiscal year on June 30, as taxes would have to increase 32 percent to address the issue by that method alone.

“This is obviously unacceptable,” he said.

Finizio said actions taken regarding the , including the decision not to renew and the , were made in good faith.

“When those agreements were entered into, we had a very different picture of what our financial situation was,” said Finizio.

Sprecace disputes numbers

Councilor Adam Sprecace criticized some actions by Finizio as contributing to the deficit. He said these include the creation of new office space in for the mayor's staff and the in the as well as the police personnel.

“These are costs that were made before the administration had a sense of what the city finances were,” said Sprecace. “I think that’s a problem.”

Sprecace also disputed the figures arrived at in estimating the deficit, saying that during his work with the council’s Finance Committee numbers are adjusted throughout the year and that the city is only halfway through its current fiscal year. He said that based on the figures he’s received, he thinks the deficit is closer to $6 million.

“I’m skeptical,” he said of the $12 million deficit projection. “I was involved during the whole budget process over the past four years. I’ve never seen a deficit like that which was presented tonight.”