CITY ANNOUNCES FY 08-09 CLOSEOUT, CREDIT RATINGS REAFFIRMATION & PROVIDES OUTLOOK FOR NEXT STEPS
(9/21/2009) CITY ANNOUNCES FY 08-09 CLOSEOUT, CREDIT RATINGS REAFFIRMATION & PROVIDES OUTLOOK FOR NEXT STEPS
NEW HAVEN- Mayor John DeStefano, Jr. announced today that the City had achieved a positive result of operations for the Fiscal Year 2008-09 General Fund. At year end, the City was able to improve its fund balance by $356,000 to approximately $15.8 million, or 3.6% percent of the City operating budget. DeStefano also announced that the City’s impressively high tax collection rate of 98.4 percent, a slight increase over 2007-08 fiscal year. Also noteworthy was the fact that the real estate portion of the tax levy collected was over 99 percent. This too was a slight increase over the previous year.
“In this challenging global financial environment, our ability to control expenses and to closeout the year with a balanced budget is highly impressive,” said Lawrence Rusconi, Director of Budget and Management for the City. “Most states and municipalities across the nation are battling these rough economic times and in many cases experiencing substantial deficits, but thanks to our proactive efforts from the very beginning, we are weathering the storm in New Haven.”
New Haven began the 08-09 fiscal year with a $6 million gap. This gap was closed through workforce reductions, energy and other non-personnel savings. While the City was managing its initial $6 million gap, the nation went into a prolonged and deep economic crisis with the bond markets shutting down which created new challenges for the City.
As a result of its own financial problems the State did not fund PILOT reimbursements at projected levels helping to create a new $6.5 million hole for the City to fill. Concurrently, adjustments had to be made to the grand list as a result of assessment appeals that resulted in a loss to the City of $4.9 million. The City immediately implemented a strategic action plan that was updated monthly to achieve a balanced budget. The action plan mainly revolved around an aggressive expenditure control program that allowed only for emergency purchases that had to be approved by the office of the controller. The plan also included significant energy and other utility savings.
Also contributing to the City’s ability to make-up for lost revenue were the following:
-the establishment of a PILOT agreement with the New Haven Parking Authority that brought in $2 million in the FY 08-09 year and will pay the City $3 million in the current fiscal year.
-a renegotiated PILOT agreement with Yale University
-a $3.2 million increase in building permits over budget
“The Management and Budget office’s ability to manage what began as a $6 million budget gap at the beginning of the fiscal year, that increased significantly several times throughout the year, to our ability to produce a balanced budget demonstrates our unrelenting commitment to balance the City’s budget despite challenges we may face,” said Mayor John DeStefano, Jr.
New Haven’s positive result of operations stands out amongst many other urban municipalities that share in the uncertainties associated with State aid and general economic conditions but particularly resonates amongst peer cities and of Connecticut. It’s obvious that while we made some difficult choices, they were the right choices. Our peer cities weren’t as fortunate as New Haven and were unable to achieve the economic position we were able to accomplish. Our credit ratings validate this position,” said Alderman Yusuf Shaw (D-23), Chair of the Board’s Finance Committee. “We’re setting high standards and defeating the challenges that we’ve faced.”
However, the City was affected by national economic trends in FY 2008-09 particularly as they related to line items affected by the downturn in the real estate market. Tax appeals cost the City $4.9 million in lost income, Real Estate Conveyance Tax collections experienced a drop of $365,000, City Town Clerk Recording Fees dropped by $154,000, Investment Income decreased by $2.6 million and the City’s share of Off Track Betting income came in at $367,000 less than initially projected.
Further, DeStefano stated that despite continued fluctuations and uncertainties in the world financial markets and difficult situations for most cities, New Haven was informed last month that it has maintained its credit ratings with the main credit-rating agencies. During the City’s most recent credit rating process (in July 2009), all of the City’s ratings were affirmed resulting in the recent and very successful sale of Bond Anticipation Notes. Moody’s and also, Standard and Poor’s Investor Service cited the City
Management’s implementation of action plans which included effective expenditure controls and new Payment in Lieu of Taxes (“PILOT”) programs (i.e. the New Haven Parking Authority and Yale) as helping the City balance it’s budget without having to use fund balance or increase the tax rate. Positive operations are clearly integral to sustaining the City’s financial and credit ratings. Such stability allows the City to continue to have access to the credit markets, at a time when the marketplace was as challenged as ever.
Other factors cited in the ratings were the City’s strong tax collection rates, its stable economic base, and perhaps most importantly, its ability to effectively manage budget operations, producing consecutive and positive operating results.
“The reports from the credit-rating agencies demonstrate the stability of New Haven’s finances and speak to the efforts of our Office of Management and Budget, Finance Department and other City agencies in controlling costs and making smart, yet difficult, choices,” said DeStefano.
DeStefano noted that despite hard economic times and shortfalls in State aid and PILOT reimbursements, the City has still made a significant achievement. “We’ve experienced a tough year and made difficult adjustments for the current fiscal year but, regardless of all of this, we maintain our commitment to provide quality services to residents, make programming and jobs available to youth and expect nothing less than excellence in education,” said DeStefano.
During the 08-09 Fiscal Year, the City employed 1,400 teens through its Youth at Work Program, graduated more than 1,000 students, achieved double digit gains on CMT exams, made significant progress toward narrowing the achievement gap and opened new state-of-the-art schools. At the same time, the City began the first steps in a district-wide school reform initiative that will make New Haven the best urban school district in the country and provide scholarships to eligible students who work hard and follow the rules.
DeStefano discussed three major efforts that aggregately will contribute toward closing any imbalances in the current fiscal year:
- Assessors initiative that will recover more than $1.5 million in under-assessed or unreported personal property and motor vehicles
- Asset expenditure control program to limit departmental spending to necessary non-personnel expenses only
- Continued action plan to be adjusted monthly to meet the needs of delivering a balanced budget