The Finance Committee was told Thursday that it will have to take into account unanticipated increases in some municipal costs as it works to reduce a $42.3 million budget and tax rate rejected by voters this week.
Finance Director Jeff Smith said that based on the latest information he has received, the city will be facing higher than expected fees from the Municipal Employees Retirement System as well as Southeastern Area Transit. He said he also asked departments for a five-year average of their actual spending and determined that the expenditures budgeted for the law department are $75,000 less than what the department typically spends.
Smith had not calculated the total anticipated increase as of Thursday. The costs represent an additional hurdle for the committee as it tries to meet the goal of reducing the budget to reflect a five percent tax increase, which prior to any increases would require a cut of $1,265,000.
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A referendum vote on Tuesday rejected the passed by the City Council on June 19. Voters also overturned a tax rate of 27.22, a 7.5 percent increase from the 2012 rate of 25.31.
Councilor Adam Sprecace, who voted in favor of the budget but later supported rejecting it at referendum after saying the Finance Department did not provide sufficient information to back up the numbers, criticized the update as stoking uncertainty about the veracity of the data on New London’s finances.
“The burden of proof is going to be on the administration,” said Sprecace.
Smith defended his work with the budget, saying he has made an effort to keep the council up to date as new information on the city's revenues and expenditures becomes available. He asserted that New London’s budget difficulties arose in part from prior finance directors not keeping the council apprised of changes to the budget and said he would rather give the council the latest data than have budget overruns come as a surprise at the end of the fiscal year.
“I can give you the best numbers I can,” he said. “It’s up to you if you want to believe them or not.”
Potential savings
Mayor Daryl Finizio and Council President Michael Passero said savings are possible through debt refinancing as well as money that can be removed from the Finance Department budget. The department’s expenditures included the assumption that it would assume the costs of the New London Public Schools’ business office, but that was halted by Dr. Stephen Adamowski, a special master assigned to the district by the state.
Smith estimated that the city could save $500,000 through debt refinancing, but cautioned the estimate was based on current rates. He said the council would have to make supplemental cuts to stay within budget if the savings are lower than what it anticipates.
Finizio said Thursday that Police Chief Margaret Ackley will address the council on Monday regarding savings amounting to hundreds of thousands of dollars. He said these cuts can be made to the New London Police Department with no layoffs and without compromising public safety or cutting the K-9 program. Passero said the savings may come from eliminating funds for currently vacant positions.
Passero also said the council would take into consideration suggestions on specific areas that might be cut. Several residents addressed the committee at the beginning of the meeting to this effect, suggesting efforts to privatize some services or stronger enforcement against unregistered vehicles. Bill Cornish, a former city councilor, said an expenditure offsetting an anticipated $1 million in uncollected taxes was an unfair penalty against solvent residents.
“Don’t put that money in the budget,” said Cornish. “That’s just a burden on the taxpayers of New London.”
Union support
Some residents also questioned the stance of unions in the referendum vote. Representatives from several municipal unions advocated approval of the budget and tax rate, leading to some criticism against employees who work for the city but live in other communities. Avner Gregory, of the group Lower Our Taxes, said he felt the city has conceded too much to the unions over the years.
“Previous councils have not been doing their job,” said Gregory. “They seem to be favoring the unions.”
Speakers at the meeting also accused Passero and Councilor Anthony Nolan of having a conflict of interest in budget matters. Passero works for the New London Fire Department and Nolan is a police officer. Both councilors defended their public service, saying they have recused themselves from votes related to their departments.
“I do my best to lead and step away on things that are possible conflicts, and I will continue to do so,” said Nolan.
Passero said he has supported labor union in his public and private life and that he thinks the union employees have been “vilified” during the budget process. He said he has no greater conflict of interest than any other resident and that councilors are responsible for any such conflicts and recusing themselves from discussion.
“I don’t think it’s fair to attack my character until you see some conduct that justifies that accusation,” he said.
Finizio statement
Finizio said Wednesday that he will submit a revised budget proposal which will only remove the Finance Department funds related to the business office transfer. He recommended that the council look at reducing grants and subsidies, including municipal funds allocated to the Public Library of New London, but said the council will have the final word on any reductions.
“The only insistence that I have is that we are very careful at looking at revenues,” he said.
Finizio said the city is “effectively pushing below rock bottom” in seeking to reach a level where the tax rate goes up by five percent. He said there is a high possibility of running a deficit if revenues and expenditures are not on par with the budget and that service reductions and layoffs are probable later in the year if this does not occur.
Finizio also announced that he has laid off his office manager, Tammy Daugherty. He praised her performance in the role, saying she had been instrumental in municipal matters such as organizing OpSail 2012 and finalizing an emergency communications agreement with Waterford.
“This is a loss to the city,” said Finizio, “but I do believe that cuts need to be made at every level of city government.”
Continuing work
The Finance Committee will next meet at 6 p.m. on Monday and Tuesday at City Hall. Passero said he hopes the committee can have a new budget prepared by Oct. 1, the date of the next City Council meeting. If a budget is not in place by the time 25 percent of the 2012 fiscal year budget has been spent, the council must pass an appropriation ordinance to provide funding for municipal services.
Passero asked Smith to prepare a list of vacant city positions to determine where the city has budgeted for positions that are no longer filled. Sprecace requested more details to confirm the anticipated cost savings in a tentative agreement between the administration and New London Police Union.
