Mayor Gives Feisty Budget Presentation

The Mayor (center), and Councilmen David Bauer (left) and Phil Pessina (right), listen to community input on the mayor's budget proposal in Westfield on Thursday.

Mayor Giuliano wrapped up a series of "Budget Roundtable Discussions" with a presentation in Westfield at the Third Congregational Church on Thursday evening. Giuliano presented the recent history of the budget, explaining why there is a significant drop in revenue this year in comparison to previous years. He blasted the Democratically controlled Common Council for the budget they passed last year, which he said risked damaging the city's financial standing.

Budgetary law and history
The budget is constrained by law to be balanced, the city cannot borrow money to fund operations. Even if budget projections are inaccurate and the city needs more money after the budget is finalized, the city cannot borrow money; its only recourse is to withdraw money from the General Fund, which serves as a savings account for the city. Also by law, the Mayor is required to submit a budget to the Common Council by April 1st, and the Council has to finalize a budget by May 15th, at least 45 days prior to the start of the fiscal year on July 1st. Once the Mayor submits the budget on April 1st, his role is over, although he can veto the budget passed by Common Council (as he did last year, more below).

The budget process for the next fiscal year starts with the current year’s budget, and that is where the presentation started as well. In the current year, Middletown is spending $129 million, over half of which is spent on education (see chart above, which I modified (aesthetically only) from the Mayor's presentation). The revenues which cover those expenditures come mostly from taxes on property (real estate, autos, and boats), money from the state, and fees (see chart below, modified from the Mayor's presentation).

The mayor decried budgetary tricks that the Democratically controlled Council played last year to achieve an illusory balanced budget. According to the Mayor, these included ignoring known costs and using proceeds from the one-time sale of capital to fund operating expenses.

The known costs ignored include the cost of snow removal, which the Council reduced by $100,000, and raises in the police contract, which ended up costing $2,600,000. Those moneys were appropriated outside of the budget process during the past year (the Council approved an additional $100,000 for snow removal this year). These appropriations come from the General Fund, which serves as a savings account for the city. According to the Mayor, “The Council (last year) didn’t raise your taxes, but they took your savings.”

The Mayor reserved special contempt for the Council’s use of proceeds from the proposed sale of the Remington Rand Building. This building near the Middletown Land Fill is a brownfield site owned by the city. During last year’s budgetary process, the city had a purchaser who was willing to pay $1.2 M for the building, and the Common Council used the anticipated revenue from that sale to balance the budget. The mayor objected strenuously to the use of the revenue from sale of capital to cover operating expenses, and vetoed the Democratic Council’s budget in large part because of this. However, the budget was passed over his veto.

This year's budget woes
The budget for the current year suffers from a $5.3 million loss of revenue, compared to last year. In addition to the absence of the $1 million from sale of capital assets, the city cannot again take $1.5 million from the Fund Balance this year, and will receive $1.7 million less in state funding. Another $1.2 million reduction is due to drop in interest on the city’s investments and a reduction in fees associated with housing transactions.

Because of this shortfall in revenue, the mayor said that taxes would rise next year under any realistic expenditure plan. The mayor asked each of the directors in City Hall to develop three budget scenarios. The “directors ideal” expenditure budget would require an increase in revenue of $12.5 million, which translates into a $490/year increase in taxes on an average house in Middletown (valued at $200,000). The “level funding” expenditure budget would require a $7.8 million increase in revenue ($308/year on an average house). Even the “3% decrease” expenditure budget would require an increase in revenue of $5.8 million ($224/year on an average house).

Given these dire budgetary projections, the mayor outlined a list of ideas under consideration for reducing expenditures and increasing revenues. These included eliminating some programs (bulky waste and leaf pickup may be reduced), asking unions for unpaid furloughs and reductions in raises, reducing arts, health, and sports grants, changing the hours City Hall is open, reducing stipends for Council members, and an unpaid furlough by the mayor. These measures elicited cautious support from residents in attendance.

Giuliano reiterated his promise to eliminate money for broadcasting of City Hall meetings, to save $25,000 per year. This measure did not go over well with any of the residents, many of whom stay informed about city actions by watching the broadcast meetings. Carolann D’eon told the mayor quite forcefully that she would vigorously oppose any reduction in the flow of information from City Hall to residents.

The Board of Education budget
There was extensive discussion about the role of the Board of Education and the Schools Superintendent in determining about 60% of the city’s budget. By law, the Board of Ed receives a single line item in the city’s budget (last year: $69.4 million), and then is free to spend the money in any way they see fit (the city pays another $6.6 million in schools debt service, and covers the costs of those school employees who are part of bargaining unit 466). Giuliano said that the Board of Ed plays games every year—a threat to close a school (Macdonough last year), or to increase class size (cutting 13 or more teachers this year), incites hundreds of people to beseech Common Council for more funds to spend.

Jennifer Mahr asked the mayor how concerned citizens could improve the transparency and accountability of the School Board. He suggested that residents contact their state representatives to demand changes in the state laws that give the School Board autonomy with minimal accountability. Councilman David Bauer suggested that in November, when half of the Board members would be up for election, there would be an opportunity to gain new leadership. Kevin Smith asked what the Mayor and the Council were doing to educate the public about the budgetary process that the School Board and Council use to arrive at the Education budget. This question was not answered.

The residents I spoke to were extremely grateful for the effort Mayor Giuliano made to appear in Westfield and explain the budget process. Joe Gianetti said, “The whole thing is a lot clearer to me now,” although as he said it he shook his head as if to imply that he was not entirely pleased with the city’s financial planning.

Note: The Middletown Press covered an earlier Budget Roundtable Discussion, held at the South Fire District Station.