Schools Administrators Address Challenging Budget Questions

Ed Dypa decried the ever increasing education budget, and asked Gene Nocera, Patricia Charles, and Dan Drew when it would be held constant from one year to the next. He said that his pension was constant, and the relentless increase in taxes for the schools might force seniors like himself out of their homes.

Dypa's question came after a 30 minute presentation at the quarterly Westfield Residents Association meeting, by Superintendent Charles on the schools and the budget request.

Drew To Propose $137.9M Budget

Mayor Dan Drew gave his annual budget address last night in the Council Chambers. In attendance were members of the Common Council, the Board of Education, and the Planning and Zoning Commission. Drew is proposing a budget that will require a 0.9 mill rate increase, property taxes would rise by 3.3%. Drew said, "This will be an increase of only $2.85 per week for the average homeowner ..." In conjunction with the budget release, Drew said he would issue "an executive order implementing a hiring freeze for all but critical positions."

Mayor Invites Public To Thursday Budget Address

From the Mayor's Office:
---------------
Mayor Daniel T. Drew will be giving his budget address on Thursday, March 28, 2013, at 7 pm. in the Council Chamber. The Mayor will be inviting the Council Members, Board of Education Members, Planning & Zoning Members, Teachers unions, PTA presidents, Fire Union, Police Union, Local 466 and Teamsters. Members of the public are invited.

Conservation Commission concerned about Common Council grab of Cucia Cash

The Conservation Commission met on the same Thursday evening last week that the Common Council decided to ignore the expressed wishes of the Conservation Commission and use the proceeds of the sale of Cucia Park as revenue for balancing the current budget. They discussed this issue and decided to send a letter to the Council and Mayor about the use of the Cucia money.

The likely sale of Cucia Park is the final result of an 18 month process involving the Army Corps of Engineers, community activists from Maromas and Westfield, city officials, and virtually all those elected to represent Middletown. The Cucia Park sale was the subject of many meetings of Middletown commissions and committees, including those of Planning and Zoning (September 24), Economic Development (October 14), the Conservation Commission, and Common Council (October 6) itself.

The Army has offered the City $2 million for the sale of Cucia Park, according to Councilman Tom Serra. At their Thursday budget meeting last week, the council voted to use $1.5M of this to pay for City operating expenses. Moreover, in the Democrat's statement about the budget, they vowed to use "additional income from Cucia Park" to increase the City's Fund Balance.

These plans contradict a resolution passed by the Council in October, which required that "monies sufficient to replace the park and open space land as a result of such sale would be placed in a special City Account for the purchase of park and/or open space land." No effort has been made to determine how much it would cost for this replacement.

2008: Background to the Sale of Cucia Park

Cucia Park was selected by the Army Corps of Engineers as the preferred site for a proposed military training facility in Middletown, but only after extensive political furor over previous site selections on Freeman Road and then on Boardman Lane. Those first two sites would have caused the loss of environmentally important open space for Middletown.

To help the Army select a site that would be favorable to both Middletown and the Army, Mayor Giuliano appointed an advisory panel to work with the army on site selection, the panel is chaired by Councilman Ron Klattenberg. In August of 2008, this panel (full disclosure: I am on the panel), endorsed the sale of Cucia Park, in Westfield, to the army as an alternative to the Boardman Lane property.

Councilman Klattenberg recognized that the sale of a park by the city would lead to a loss of open space for the citizens of Westfield and Middletown, and he asked the Conservation Commission to endorse such a sale. The Conservation Commission, at their September 11 meeting, agreed to do that, with one important condition. In their letter of September 18 to Common Council and the Mayor, they said (emphasis from original letter):

The Conservation Commission endorses the recommendation of the Mayor’s Advisory Panel that Cucia Park is currently the most acceptable site for the proposed Army base. Since this site will cause the loss of a City park, we strongly urge that the monies received from this sale be placed in a fund exclusively dedicated to the City’s Open Space program. There should be no net loss of Open Space!

The endorsement by the Conservation Commission was critical to Klattenberg's panel. It was instrumental in allaying concerns from city residents that budgetary and political considerations would lead to sales by the city of its open space.

Common Council agrees with Conservation Commission.

At their October 6 regular meeting, the Common Council enthusiastically agreed with the Conservation Commission's recommendation (Eye coverage). They overwhelmingly endorsed the sale by the City of a Park in Resolution 10-12: Endorsing Cucia Park after a full review by the Economic Development, but only after Councilmen Serra and Daley introduced an amendment stating that money from the sale of Cucia Park be dedicated to replacing the loss of open space. The council agreed with the Conservation Commission.

The following is an extract, reproduced verbatim from the official Council minutes of the October 6 meeting (if you do not thrill to read official Council minutes, skip and read my summary below the minutes). These October 6 minutes were approved at their November 3rd meeting, without any modifications:

Councilman Serra moves to amend in the paragraph that is before the last “Be It further resolved” paragraph to read “Be It Further Resolved Be It Further Resolved: That the loss of approximately thirty acres of potential park and open space land lost to the City of Middletown be compensated with no net loss of equivalent open space and purchase of development rights new park land and or open space; and Be It Further Resolved: That all monies received by the sale of Cucia Park shall be placed in a special City account for the purchase of park and/or open space land; and” Councilman Serra’s motion is seconded by Councilman Loffredo.

Councilman Serra was ready to vote against this because this park was going to be taken from the rolls. Yes, we wanted a training base here at Pratt and Whitney site; however he is irritated at the approach of the Army and their strategy. They are bullying us and there is no economic gain here ; he will vote for this if this amendment passes because it ensures we don not lose park or open space land.

Councilman Daley states he respectfully urges a friendly amendment to this amendment. He is concerned about the wording indicating that all monies would be in the special fund. The process calls for negotiation and terms of sale and we don’t know what the amount would be. He is concerned that funds the City will see from this could go to other concerns besides open space land that would be lost. I would ask Councilman Serra to accept a friendly amendment to say that funds sufficient to replace the park and open space land that would be losSerra states he will accept it.

Councilman Daley restates his friendly amendment “Be It Further Resolved: That monies sufficient to replace the park and open space land as a result of such sale would be placed in a special City Account for the purchase of park and/or open space land: and” Councilman Serra again agrees to the change. ...

[At this point, the mayor and councilmen Bauer, Faulkner, and Pessina object to the restrictions that this resolution places on the use of city funds.]

... Corporation Counsel Howard responds he believes they can redo this later. The Chair comments if we are not locking ourselves into doing something we might regret he sees no problem with the amendment.

Councilman Streeto wants to go on record that Councilman Serra’s amendment was well taken and open space funds are popular with the citizens. Replacing the open space area with another would be a win-win situation for the City.

The Chair, hearing no further comments, calls for the vote. It is nine aye votes by Council Members Serra, Loffredo, Klattenberg, Santangelo, Daley, Kasper, Faulkner, Streeto, and Roberts and three nay votes by Council Members Bibisi, Pessina, and Bauer. The Chair states the matter is approved with three in opposition. ...

[Councilman Roberts suggests an amendment to remove discussion of the River Road property from the resolution, this was defeated.]

... The Chair calls for the vote on the amended resolution; it is eleven aye votes by Council Members Serra, Loffredo, Klattenberg, Santangelo, Daley, Kasper, Bibisi, Faulkner, Pessina, Streeto, and Bauer; and one nay vote by Councilman Roberts. The Chair states the matter passes as amended with one in opposition.

Summary: On October 6th, the Common Council voted 11-1 in favor of a resolution which mandated that money "sufficient to replace open space" be reserved in a special city account

2009. Cucia is Army's "Preferred Site"
The Corps of Engineers announced (April 13) that Cucia Park was their preferred site, and published a draft Environmental Assessment (EA) on Cucia and two other alternatives. This draft EA is currently in a mandated 30 day public comment period. When that ends, the Army will release a Finding of No Significant Impact (FNSI), which will allow the Army to proceed with Cucia Park for their facility.

Hoping that there will be no further complications, the Army has begun the purchasing process. They are required to pay what the army's own appraiser determines is fair market value, this is $2M.

City Budget and Cucia Park revenue
Every elected official I've spoken with agrees that this year presents one of the most difficult budget situations in Middletown's recent history. This is primarily due to a $5.3M drop in revenue compared to last year, according to Mayor Giuliano (March 19). To balance the budget, Giuliano proposed reducing expenses by cutting programs and obtaining concessions from city unions, and increasing revenue by a 4% tax increase (April 2nd).

Giuliano evaluated using money from the sale of Cucia Park to balance the budget. In an email to The Eye, he gave several reasons why he rejected this approach, "1) we can't duplicate this kind of income, 2) we don't have a purchase & sale, 3) we don't know what the conditions/contingencies of sale will be, 4) the Council (in an amnesiac moment) further encumbered the anticipated sale proceeds with a commtment to buy one of the Bysiewicz lots.

The Democrats were more willing to consider using the proceeds of a Park sale to balance the budget. Councilman Serra, in a March 22 interview with The Eye, said that the Democrats would consider using the money from the sale of Cucia Park to the Army for operating expenses if the budget situation was dire enough. He said that the money should be used first to replace the loss of open space, second for Parks and Recreation, and "If necessary some perhaps will be used for operating expenses."

The Democratic caucus on the Council decided to increase spending compared to the Mayor's proposed budget, but would not increase taxes. This worsened an already dire budget problem, which they solved in part by using most of the anticipated revenue from Cucia Park in next year's budget.

I asked several Councilmen whether the use of Cucia Park revenue in next year's budget was consistent with the resolution passed in October. Klattenberg emphasized that the resolution simply required that sufficient funds be set aside for open space acquisition, writing in an email, "I support using monies from the sale of Cucia Park to fulfill the obligation we have to compensate the residents of the city for open space lost. ... there is no question the city must provide "sufficient" funds to implement whatever plan is selected."

Gerald Daley wrote me, "it is clear that my “friendly amendment” was aimed at making sure that the loss of Cucia Park would be replaced." Councilman Streeto concurred, writing, "we were committing to replacing the lost open space with an equivalent open space parcel."

Councilman Serra told me in a phone interview that he also supports open space. He expressed his hope that the City would get more for Cucia Park than the $2M the Army has offered. He said, "I hope that whatever [extra] money we get for Cucia Park is used for three things. First, to purchase the Bysiewicz lot [that the city agreed to purchase to keep the Army from using that land]. Second to purchase open space. And third, passive recreation."

Serra also told me that the Democratic caucus did not make any effort to determine how much it would cost for the city to replace open space equivalent to Cucia Park. He said they had not had any conversations with the Conservation Commission about this issue, and had not consulted anybody about open space replacement.

Conservation Commisssion concerned
At Thursday's meeting, the Conservation Commission discussed the revenue from the sale of Cucia Park, and the Common Council's plan to spend most of it on operating expenses. They voted to send a letter to the Council and the Mayor, reminding them of the letter they had sent on September 18, and of the Council's own commitment of October 6 to reserve Cucia Park revenue to replace open space. Sheila Stoane, chair of the Conservation Commission, told me that this letter would be going to the Council shortly.

Council Approves Budget with more Spending and less Taxes

The Democratically controlled Common Council voted to approve a budget which restores funding to a myriad of programs cut by the mayor, increasing expenditures from $128.5M to $129.7M. Despite this substantial increase, there would be no increase in taxes under the Council's budget.  While the mayor's proposal included a mil rate increase of 1.0, the council's budget keeps the mil rate constant.  

The council was able to balance a budget that has increased spending and level tax revenue by using $1.5M of revenue from the anticipated sale of a city park, an anticipated $1.75M in revenue from the NRG Power Plant, and by taking $1.5M from the city's Fund Balance.  

The vote on the budget was strictly along party lines, with all 4 Republicans voting against it, and all 8 Democrats voting for it.  

Programs and positions restored

The Democrats restored funding to a wide variety of government services in the community.  The numbers which follow are approximate differences between Mayor Giuliano's proposed budget and the Democrat's budget, lumped to give a rough sense of the budgetary changes.  The increases were: youth sports ($85k), youth summer work program ($45k), senior citizen activities ($16k), art support services ($35k), health support ($230k), community events ($65k).  The Board of Education budget was increased by $200k, and 5 vacant police officer positions were filled ($250k).  

Rejection of Union Concessions to City

The Council rejected the Memorandum of Understanding (MOU) that was reached between Mayor Giuliano and a coalition of unions representing city workers.  The MOU delineated over $1M in concessions that the various unions were willing to take in order to help the city balance its budget. These concessions included unpaid furloughs, changes in health benefits, and an agreement that some positions would not be filled immediately. 

This agreement arose following an initial meeting on January 30th, between Giuliano, department heads, school board, school superintendents, and representatives of all the city unions. The Democrats refused to participate in those discussions.   

The Democratically proposed budget gives back to the unions the furloughs and the positions.  Councilman James Streeto said that he could not accept a package of concessions which included no hiring of 5 police officers, "The reduction of police numbers was from the get-go a problem for me."

Several dozen union members attended Thursday's budget hearings, and were clearly annoyed to see the Democrats on the Council refuse the concessions that they had agreed to.  

In interviews with The Eye after the meeting, I asked why union members would be upset at no longer having to take the furloughs and other concessions they had offered to the City. Councilman Klattenberg was mystified by the union members' anger, but he offered a suggestion that perhaps the union leadership had invested so much in the negotiations within and between unions that they were disappointed it was all for naught.  Mayor Giuliano said something similar, "Unions are [now] feeling that [negotiations and concessions] was all B.S.  They feel they were kicked in the head."  Councilman Bauer suggested that union members were taking a broader, long-term view of their job security and were haunted by the specter of future layoffs, "By putting the city in a weaker position [with this budget], next year there may be layoffs. This injects job uncertainty."

Increased revenue without a tax increase

To pay for the increased services and their refusal of Union Concessions, the Council decided to allot money from the expected sale of a park to cover the City's operating budget. Cucia Park is a city owned park which the Army has chosen for their military training facility.  The city anticipates receiving at least $2M from its sale to the army. 

The Council budget uses $1.5M of anticipated Cucia Park sales revenue to offset the increased expenditures and rejected concessions for the 2010 budget. Klattenberg said that money from the sale of Cucia that is beyond the $1.5M would be used to restore the Fund Balance.   In response to criticism of the use of anticipated revenue, Klattenberg said, "I believe that you need to have confidence based on professional judgement that the money will be there... To not include money that is anticipated would be irresponsible."

The Council used a similar strategy last year, when they included the proceeds of the anticipated sale of city-owned Remington Rand Building to balance the 2009 budget. That sale did not materialize and money was withdrawn from the Fund Balance instead.  

Another controversial source of revenue in the proposed budget is the use of this Fund Balance money to pay for the operating budget.  The Council more than doubled the amount of money that Giuliano wanted to withdraw. Both Giuliano and Klattenberg told me that City Finance Director Carl Erlacher was alarmed at the depletion of the Fund Balance, which serves as a reserve of last resort for the city.  The Democrats said that the level of the Fund Balance (about 7.6% of the annual budget after the coming withdrawals) was consistent with sound municipal accounting principles.

The use of the Park sales money and Fund Balance withdrawals allows the City to achieve a balanced budget with an increase in expenditures but no increase in the tax rate, which would stay at 25.5 mil.  

Mayor to test budget with staff

Giuliano has 5 days to either accept the budget as passed by Common Council, or to veto it, according to the City Charter.  He promised the Council to make a good faith effort to implement the budget as passed by the Council.  He said he would consult with the Finance Director, as well as other Department Directors to see if this was feasible, "If I don't think we can make it work, the Charter provides me with a means to bring that to your attention."  

Giving out the grants: CDBG Part Two

A few weeks back, I wrote about the local non-profit groups and city departments that submitted applications for Community Development Block Grants. On Wednesday, the Citizen Advisory Committee met at City Hall to discuss how to distribute this federal funding from the Department of Housing and Urban Development, which is expected to amount to $407,000 this year.

In addition to their regular allocation, Middletown also has hopes that the Stimulus package will bring an additional $110,000 in CDBG funds, later this Spring. There will be a new, open round of applications for those funds, but they will only be targeting projects which are shovel-ready and can be completed within 120 days. As with all CDBG funds, the grants will be targeted for projects which help low to moderate income people.

At Wednesday's meeting, the CAC created a list of recommendations about which projects should be funded through CDBG. In May, the Common Council will consider that recommendation, but it should be noted that it's not uncommon for the Council to completely revise the distribution of the funds -- the work of the CAC is purely advisory.

Public Service

This year, the CAC attempted a new process for their $61,000 in public service grants. Instead of giving very small grants to the range of applicants, they decided to give larger grants to fewer applicants. They offered $15,000 each in three categories: after-school programs, home ownership and job training. There was an additional $16,000 left undesignated for any other projects the committee wished to support. Apparently, some of the applicants tailored their requests to these grants, but others did not. For example, there were four programs that offer after school/camp activities, but only two specifically requested that grant, so the others were competing for the unrestricted funds.

Creating these focused grants was an effort to be more strategic in their grant-giving, but the new system led to some conflict as the committee members realized that the unrestricted funds would not stretch as far as they would like.

The Public Service grant recommendations were:
•$15,000 after-school grant: Green Street Art Center
•$15,000 home ownership grant: North End Action Team
•$15,000 job training grant: Russell Library

The remaining $16,000 in unrestricted funds were recommended as follows:
•$8,000 to the Chamber of Commerce for their job training activities
•$5,000 to Oddfellows Playhouse for their neighborhood troupes
•$2,000 to Shiloh Christian for their Adventures in Learning after-school program
•$1,000 to Literacy Volunteers for their Macdonough parent tutoring pilot program

As I reported earlier, in this round there were $236,606 in applications for the $61,000 in grants. Green Street, Oddfellows, NEAT and Russell Library received their full request, although in each case the projects are only partially funded by CDBG. Shiloh Christian, Literacy volunteers and the Chamber received significantly less than they asked, but the committee felt that supplying even limited funding was an important step.

The following programs did not receive any funding: CRT's effort to make payments on delinquent mortgages; Amazing Grace's new Saturday hours at their food pantry; Raegan's job training and entrepreneurship program; Shiloh Baptist's Camp Shiloh; HOPE's effort to begin development of four new home-ownership units; the City's plan to offer a compact florescence bulb exchange; and CT Legal Services pilot program to educate social service providers about resources for people in need.

Planning & Other Grants

As expected, the Section 108 loan repayment was set at $45,000 and the $80,000 allotment for planning was recommended for expenses of the city Planning, Conservation and Development office. A new item was added by the Mayor's Office, however, to use $100,000 in CDBG funds to help pay for code enforcement activities by the city -- in other words, to pay for staff time of existing code enforcement officers. These expenses are all allowable by HUD and the CAC did not alter these requests.

Construction

After the other categories were completed, the CAC considered the remaining $121,000 for construction grants, making the following recommendations:

$35,000 to Godfrey Library to make the building accessible to people with disabilities
$36,515 to Shepherd Home to bring their kitchen up to code
$30,000 to the Middletown Police to buy an additional camera for the North End
$5,000 to Eddy Shelter to tile a floor
$14,485 to McCarthy Park to continue improvements at the downtown park

There were $811,476 in requests in this category. The Godfrey Library and Shepherd Home received their entire request, and the Middletown Police received half of their request for two cameras. The Eddy Shelter's request contained some ineligible items, and they were fully funded for the item which qualified. Friends of McCarthy Park received far less than their $71,500 request, but they made it clear that they could implement their work in phases if less funding was granted.

The projects that did not receive any funding were: the Middletown Public Schools proposal to upgrade the administration building at the corner of Hunting Hill and Russell Street; Shiloh Manor's request for various building repairs at the Butternut Street senior housing (affiliated with Shiloh Baptist); the city Redevelopment Agency project to purchase and demolish a house on Bridge Street; Gilead House's request for help with a downpayment on a Liberty Street house that they currently rent and operate; and the relocation of St. Vincent's Soup Kitchen, which is contingent on the move of the Community Health Center.

About the process

After the April 1st hearing, the members of the CAC ranked each application and tried to consider whether partial funding would be useful or whether the project was more of an all-or-nothing venture. In the future, making site visits and having more time with each applicant would be worthwhile goals, and would add to the logic of the recommendations.

The Common Council will review the recommendations and have the final say on how the CDBG funds are allocated. For the construction projects that did not receive funding, the committee was hopeful that some of them might be eligible if the City does receive Stimulus CDBG funds later this Spring.

Mayor announces $1 million in savings for City from union concessions

Mayor Giuliano held a 2PM press conference at City Hall on Wednesday to announce that his negotiations with the four unions representing city employees had yielded over $1 million in savings in next year's budget. The press conference was attended by about 50 union members, who were lauded by the mayor for being "the best work force going."

Union Concessions
The four municipal bargaining units which gave concessions that directly affect the city budget are:

• Police Union, Local #1361
• American Federation of State, and County, and Municipal Employees (AFSCME), local #466. This union represents employees throughout the city government, including Public Works, clerical, Parks and Rec, etc.
• Firefighters Union.
• Middletown Managers and Professional Association, Local #6092. This union represents 49 engineers and managers working for the City.

These unions agreed to unpaid furloughs, delays in raises, and changes in insurance plans. The mayor was asked by Jamie Muro (News Channel 8) why Middletown was successful in negotiating concessions from the unions when other towns and cities in Connecticut were not. Giuliano credited the workforce and the unions:

They put their community first in everything they do.... I have a great deal of respect for them and I think they have a corresponding degree of respect for me.

Giuliano said that he supported furloughs over pay freezes because a furlough does not have a permanent negative impact on future salaries, and it did not affect pension contributions as much. He said that non-union city employees, including directors and himself, would also be taking unpaid furloughs, "The pain will be spread around."

I asked Mayor Giuliano what sort of service cuts the residents might expect to see when city employees took furloughs. Giuliano said he did not foresee any reduction in service, he said that the furlough days would be spread uniformly, and that the efficiency and dedication of the employees would ensure no reduction in service.

Union support
The union members in the audience loudly cheered the mayor several times during the press conference. After the press conference ended, Jeff Daniels (picture in blue shirt at right), president of AFSCME 466, told The Eye how his union approached the budget discussions, "I knew what we were up against. It's important for us to look out for the community, our job is to step up."

Daniels echoed the mayor's words in speaking frankly of his frustration with the Board of Education budget process. He wanted the Board of Education to be accountable to the taxpayer, "There's no control over the Board of Ed, that bothers me.... If they don't get what they want, they threaten to close schools."

Two other unions, the Middletown Federation of Teachers, Local 1381, and the Middletown Federation of Paraprofessionals, Local 3161, have joined with the above four unions in forming the Middletown Coalition of Municipal Employee Unions. This coalition authored a letter and spreadsheet to the Mayor recommending a long list of cuts to the City and the Department of Education budget.

Their suggested changes in the Board of Ed budget include the return of surplus funding from this year, and cuts in 7 administrative positions (the "Business Manager", "Assistant Superintendent of Pupil Services" 4 "preK-12 Supervisors, and "Alternative Education Supervisor"). The letter from the coalition claims that these changes would allow the Board of Ed to avoid cutting 13 teachers in next year's budget.

Unions look to Common Council
Both Mayor Giuliano and the union leadership spoke about the role of the Democratically controlled Common Council in the budget process moving forward.

Derek Puorro, President of the Police Union, told The Eye that all of the union members were prepared to become heavily involved in the Common Council elections taking place later this year, "We pay attention to how Council votes. We let our family know, we let our friends know how things go." John Milardo, president of MMPA (pictured in green shirt at right), echoed those thoughts in a letter to his union members, "You better think hard and long when you go into the voting booth this coming year."

Serra Discusses the City Budget

In an interview with the Eye, Democratic majority leader on the Common Council, Tom Serra, blasted Republican Mayor Giuliano for playing politics with the budget during this period of fiscal crisis for the city. He defended the Democratically controlled Council for their handling of a number of controversial decisions during last year's budget process (including the Remington Rand sale, discussed elsewhere), and promised to restore funding for public access broadcasting of Council meetings.

Calls Mayor's Budget Round Table Discussions a "Sham"
Serra said he had attended the Budget Round Table discussion by the Mayor at the Chamber of Commerce and was "extremely irritated" by it, "These [Round Table discussions] are really just a campaign trail battering of the Democratic Common Council, a way to thrust his opinion on the residents." He called for cooperation between the mayor and the Democrats, "The Mayor hasn't communicated with Council one iota."

Serra said he found it ironic that a Republican Mayor was less fiscally conservative than a Democratically controlled Council, claiming that since Giuliano took office he had raised taxes by 5.3%, which is more than the previous 10 years, when Democrats controlled the executive branch. Serra said that the initial offer made by Giuliano to the police unions was a 32.5% raise over 5 years. The raise that was ultimately approved through arbitration was for much less: 22% over 5 years. Including the arbitration costs, this difference saved the city almost $3 million over the 5 year contract. Serra expressed his commitment to providing raises that match the increase in the Consumer Price Index.

The police raises were not budgeted by the Common Council, but instead paid for through the City's Fund Balance. Serra minimized the impact of those withdrawals, saying the fund balance is not a city "savings account", as characterized by the Mayor. Instead, it serves two purposes: it provides funds for unexpected expenses and it signifies to the bond rating agencies that the city is in solid financial health. He said that the unreserved Fund Balance of $13.8 million was ample to give the city a top credit rating by the Moody's rating agency. He said it was "smoke and mirrors" for the mayor to claim at the Budget Roundtable discussions that the Democrats "raided your savings".

Balancing the Budget This Year
Serra called for three approaches to producing a balanced budget.

1. Reasonable cuts in services.
   
2. Lower raises for union contracts, across the board. Serra emphasized that the cuts should fall fairly on all bargaining units.
   
3. Tax increase. Serra said that this should be minimal.
   

I asked Serra why the Democrats had not participated in the January 30th conversations between the Mayor, departmental directors, the Board of Education, and the unions. Those discussions were about possible furloughs and/or reductions in pay raises, an area that Serra said was an important part of balancing the budget this year. He dismissed those conversations, "as a ploy to get Democrats involved in negotiations to share the burden [of negotiating]. That's not our role, we will get involved as a legislative body. ... It's his responsibility." He recalled that when he was mayor during a recession in 1994, he negotiated with unions a delay in their raises.

Serra anticipates that there will be additional revenue in next year's budget compared to last year, including $750,000 from the NRG power plant, and possibly $1.2 million from the Kleen Energy power plant.

We also discussed the possible revenue that might come to the city if the Army decides to purchase Cucia Park for their military training facility. He indicated that the Democrats would consider using money from the sale of Cucia Park to the Army for operating expenses if the budget situation was dire enough. He said that the money should be used first to replace the loss of open space, second for Parks and Recreation, and "If necessary some perhaps will be used for operating expenses."

Public Broadcasting of Council Meetings to be Restored in the Budget
One item that Serra specifically vowed to restore in the budget is the money for broadcasting of Common Council Meetings, which he initiated as mayor in 1994. "Since the demise of print media, it is definitely important to people ...... Cititizens out there need to see what elected officials are doing." Responding to the mayor's concern that broadcasting of meetings leads to longer meetings, Serra pointed out that the Mayor, as chair of Council meetings, has control over the length of meetings. He called on the Mayor to utilize Roberts Rules of Order effectively, to run more efficient meetings.

Agreement with the Mayor on the Board of Education Budget Process
Councilman Serra said that in years past the Board functioned well in establishing a budget. He felt that the budgeting process last year was not as functional as it should have been, sharing the frustration of the mayor.

Serra explained that the autonomy of the Board of Ed (by state statute) means that the city has minimal control over spending on education. However, in years past he has advocated with the Board for an increase which simply matches the Consumer Price Index. In November of 2007 he met with board members Raczka, Keiser, and Boyd, Superintendent Frechette, Finance Director Erlacher, and Councilman Klattenberg to discuss the education budget. He was frustrated when the Board came to the city with a 12% increase in their budget, far more than the 5% he felt was justified.

His frustration increased last year when the Board threatened to close Macdonough School if their budget was not met, generating extensive public protest directed at the Common Council.

The Budget Process Going Forward
The Council will begin analyzing the Mayor's budget as soon as he submits it on April 1st. Common Council will hold a series budget meetings in April to discuss with City department directors the budget implications for each department. Those meetings will take place on April 14th and 15th at 6PM, April 20th at 7PM, and April 21st at 6PM; they will be open to the public but there will be no public comment period. On April 28th at 7PM there will be a public hearing on the budget.

Council is required by statute to approve the budget by May 15th. Councilman Serra was confident about Council's ability to balance the budget without substantial tax increases. "There may be very slight increase in the mill rate, we're talking about tenths of a mill, not several mill."

Serra defends handling of Remington Rand sale proceeds

Democratic Majority Leader in the Council, Tom Serra, defended the Council's handling of the sale of the Remington building, in an interview with The Eye on Sunday. He was responding to Mayor Giuliano's criticism of the use of the anticipated sales revenue by the Council to balance the City's budget in the 2008/09 year budget. The sale of the Remington building has recently been jeopardized by the reduction in the share price of the company, Unisys, responsible for the $5 million clean up of environmental contamination at the site.

Serra said that the deal should have been finalized before the stock price of Unisys collapsed from about $5 to about $0.50 per share. Serra said that the resolution authorizing the sale was passed in April of 2008, and questioned why the closing of the deal took so long. He said about the mayor, "He was cool to [the sale of Remington Rand] when it was suggested," and said that the Mayor's "footdragging is responsible" for the possible collapse of the sale.

The Remington Rand sale to Thomas Briggs was endorsed in April 2008 by the Economic Development Committee. The City also considered another offer for the building, by Evan Blum. The Council used the anticipated proceeds from the sale of the building as revenue in the budget that they approved on May 15th of last year. On June 2nd, the Council voted to accept Briggs' offer to purchase the building.

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.

Mayor Giuliano to lead community budget conversations

Mayor Giuliano provided details about his plan to get community input about the city budget in an interview with the Eye last week. He said that his office would give a presentation on the budget at community meetings in various locations throughout Middletown in March.  Although the venues are yet to be determined, these meetings would likely occur at Fire Stations, the Library, and with neighborhood associations. 

The mayor has directed department heads to prepare four budget scenarios: 

1. Department ideal: What the department would like to provide, if there were sufficient funds. Each department head has been asked to provide goals and a justification for this budget scenario.  
2. Level service: Providing the same services as currently provided. This would require an increase in funding, as the cost of salaries and benefits have risen in the past year.
3. Level funded: No increase in funding, This would in most cases lead to a decrease in services.  
4. A 3% decrease from current funding.  All the departments were able to provide this, but they required substantial cuts in city services.

At the same time, the city is estimating how much revenue there will be from property taxes, fees, and state and federal sources.  Tina Gomes, budget analyst in the Mayor's office, said that even with a 3% cut in funding, there likely would still be an increase in taxes, because there are substantial revenue holes to fill.  One of those is the loss of funding from the state, primarily because of a cut in PILOT funding (payments in lieu of taxes). 

Another revenue hole is a result of what the mayor said was irresponsible budgeting by the Common Council in previous years.  Last year the Common Council used over $1 million from the sale of city-owned capital, the Remington Rand building, to pay for operating expenses. This year the city does not have a property to sell, therefore there is $1 million less revenue compared to last year. Last year's budget also did not account for items that in the end were paid for out of the general fund.  The arbitrated and retroactive increase in the police contract was paid for from the City's general fund, as was snow removal ($100,000 was taken from the general fund at the last Council meeting to pay for overtime).  

Giuliano decried the Democrat-controlled Common Council's budget "gimmickry" in establishing the budget last year, saying:

The council seems to look at [the budget] with blinders on.  And that's how you get into the rob-Peter-to-pay-Paul kind of situations. One time infusions of cash to pay operating expenses, yeah it all looks good this year, but you're creating a bunch of problems next year.  ... Next year, fiscal 2011, we got to worry about Aetna going, what kind of impact is that going to have on us? ... To bleed ourselves dry by creating these kind of holes in the budget or raiding the fund balance, you're going to lose the ability to deal with that problem next year.  

Giuliano said that the biggest single item in the budget, the budget for education (about $70 million, in a total budget of $130 million), would be provided by the Board of Education by March 3rd at the latest. He anticipates a budget from the Board of Ed that contains an increase of between 0% and a 2%.  Giuliano expressed his frustration at the lack of transparency by the Board of Education, which has yet to hold any substantive public discussions about their budget (they will be meeting this week to discuss the budget (Tuesday, February 24, 8:15PM)).

Giuliano hopes that a series of community meetings in March will offer residents an opportunity to provide thoughtful input into the budget priorities of the City.  He wants to ensure that the city's budget is not cut to the point that the character of Middletown changes. 

Board of Ed will consider budget cuts

The Board of Ed is still not ready to vote on a budget for 2009-2010, but it has at least taken a first step in figuring out what cuts Middletown should consider.

Back in December, Superintendent Michael Frechette submitted a "roll-over" budget to show the cost of maintaining - but not increasing - all of the school system programs, including any contracted raises in salaries or fees. The total of $73,235,856 represented a 5.61 % increase over the current year, meaning an additional $3,885,856 in education costs. In a typical year, the next step would have meant Board approval of the Superintendent's proposal, and then debate at the Common Council. Of course, this is not a typical year.

On February 4th, the Governor announced that she was not proposing any cuts to State education funding -- which represents about 25% of our local school budget. But she also proposed cuts of nearly $2 million in other funding that Middletown received this year. Unless taxes are raised, the City will either have to cut deeply into other city services, or ask the Board of Ed to share some of the pain that Hartford will likely deliver (of course, we have no idea how the Legislature will change the Governor's proposal or what funding Middletown will eventually draw from the State next year.)

Which brings us to Tuesday night's Board of Education meeting.

Chairman Ted Raczka announced that the Mayor had indicated that he would like to see the Board of Ed propose an increase of 0% to 2%, instead of the 5.61% in the Superintendent's budget. To this member of the public, it was not entirely clear whether this informal request also came from both parties in the Common Council. But the Board took it as direction on how much they could hope for from the City.

For the purpose of meeting the Mayor's need for a budget request by March 1st, Chairman Raczka proposed voting for a 2% increase, or $1,387,000 over current year, for a total budget of $70,737,000. His proposal hinged on the notion that the Board could send a "bottom line" to the Mayor, without specifying what cuts would have to be made to achieve such a small increase.

This concept drew fire from other Board members of both parties. Republican Corinne Gill instead proposed that the Superintendent should submit a 2% budget by February 17th, giving Board members a chance to review it before their next scheduled meeting on February 24th, allowing them to still meet the Mayor's deadline of March 1st. Democrat Bill Boyd liked that idea and made the motion. Bill said "I can’t emphasize enough how meaningless it is to submit 2% without listing everything that would have to be cut to get there. It borders on irresponsible. What is it going to do to our programs, our personnel? The Mayor and the Council need to know that too."

In contrast with Chairman Raczka's concern that proposing a list of cuts at this point would be too rushed, the other Board members felt that merely "sending a number" would just put off the hard work of making choices, and they wanted to avoid the late-Spring rush. Last year, the Board was forced by the Council to make significant cuts just weeks before the start of the new fiscal year.

By the end of Tuesday's meeting, the Board had approved the motion to ask the Superintendent to submit a 2% budget proposal by February 17th, with discussion to open on the 24th, and approval as soon as possible thereafter.

I'll note that to achieve an increase of only 2%, the Superintendent will have to find $2,498,986 in cuts from the flat budget that he proposed in December (you can see that roll-over budget here.) Good luck with that, Michael.

The next Board meeting, on February 24th, will consist first of a workshop on the District Improvement Plan from 6 to 7:30 pm. Then the Board will have a discussion, hopefully informed by the workshop, on what their priorities should be in this upcoming year of limited funding. Then, at 8 pm or so, they expect to open a special meeting to officially accept the District Improvement Plan and then consider the new budget. A location for the meeting has not yet been chosen.

Giuliano Reacts to Rell's Budget Address

"It's not great news, but it's not as bad as it could've been," Mayor Sebastian Giuliano said after hearing Govenor Jodi Rell's budget address today.

The mayor expects to receive $1.6 million less in PILOT (Payment In Lieu Of Taxes), from the state, but other programs like LoCIP, and especially the education grants (see previous posting), will receive the same level of funding.

"I heard word that the schools were expecting to have up to $2,000,000 cut, so this is a relief," Giuliano explained. "Just keeping the operation level. Not doing anything different, the school budget is about $4,000,000 higher this year. If the state had proposed cuts, it would have been a disaster."

On the city side, the mayor was not so sanguine. The cuts in PILOT reimbursements will take the city from a $4,000,000 gap, to a $5.6 million gap.

"The state traditionally underfunds PILOT," Giuliano said. "This year they're just going to underfund it more.

"What we are going to have to do in terms of process is to cover everything that is mandated first, and then look at every other program we've funded before, and see what we can put back in," the mayor said.

In her speech, the Governor urged the legislature to create a moratorium on unfunded mandates. They mayor said that if the legislature concurs, it will help close some of the gaps.

"Especially on the school side. If the legislature decides to put things like in-school suspension on hold, that will help the schools close some of the gap. And not having all those mandates will help on the city side too."

Giuliano has some doubts about how much help the stimulus package will have for the cities.

"The goal is to create jobs," Giuliano said. "Initially we proposed things that were already bonded because they were the only things that we could actually begin work on in 120 days. Now they're talking about accepting projects that will begin next year, or two years down the road. How is that going to help?"

Giuliano sees the need for cooperation, and the need for extraordinary action for the city to weather the economic hard times.

"I've met with the unions, staff and managers, and everybody understands that we need to be proactive. However, approvals are made by the Common Council, and so far they seem to want to be proactive."

Giuliano was disappointed that Democratic members of the Common Council snubbed his invitation to a discussion with unions and city staff about economic issues, and he still felt stung by criticisms directed him at Monday's Common Council meeting for presenting a union agreement with a two and a quarter per cent increase.

"That pay raise really amounts to less than one per cent," Giuliano explained. "When you understand that they agreed to freeze steps. And this is the working class union - the janitors, and the clerks, the school cooks, the sanitation workers. These are the people who need it. These are the city employees who live in town. It seemed like a no-brainer to me.

"They talk about being proactive, about not taking precipitous action, but they want me to create a proposal that they can criticize, that they don't have to take ownership of. That's the definition of reactive."

"If we're going to get this solved, we've all got to help out." Giuliano said. "We all need to be able to take unprecedented action."