Faced with an $8 million revenue shortfall in his proposed 2012-13 budget, Mayor Pedro Segarra has proposed a mitigation plan to close the gap.
Segarra's plan calls for $2.65 million in cuts, including a $1 million reduction in expected health care claims, $500,000 from the summer employment program, the entire $150,000 budgeted for the innovation fund and $80,000 for lobbyists.
Segarra said Tuesday, based on this fiscal year's third-quarter report, he felt confident that the city could save significantly on health insurance claims. He added that the city would look for grants to support the innovation fund, which promotes small-business opportunities.
As for the cut to summer youth employment, Segarra said that, too, would be made up by private grants that would keep the program operating at current levels.
"These cuts are real cuts, they're hard cuts," he said. "We had to make some tough choices."
The city council will meet Thursday to consider Segarra's suggestions and discuss other options. The council can choose to make cuts in other areas and submit them to Segarra, which he can veto or accept. Segarra is responsible for revenue adjustments.
Segarra is also projecting an additional $3 million in revenues, including $1 million from property tax lien sales, $575,000 in building permit fees and $1.4 million in intergovernmental revenues related to school construction reimbursements, tax abatements and other areas.
Segarra said the projections were based on past experience and discussions during the year with potential developers.
If the revenue does not materialize, Segarra said the city will meet the challenge of making up the difference without resorting to dipping into the fund balance, or "rainy day fund."
"To hit the fund balance would jeopardize our bond rating," he said. "That would be one of the last resorts."
The remaining $2.57 million gap, Segarra said in a statement released late Monday, would be made up through an additional 0.8-mill increase in the tax rate on top of the pending 3.51-mill increase. The result would be a tax rate of 76.1 mills, according to Segarra. A mill equals $1 for every $1,000 of assessed property value.
This increase, according to Segarra, will produce an approximate 2 percent tax increase for single family properties, which is 3 percent less than originally projected.
Council President Shawn Wooden said Tuesday that he appreciated Segarra putting forth suggestions as the council works to finalize the budget before sending it back to the mayor for approval.
"It give us more to consider as we proceed," Wooden said.
Last week, Segarra unsuccessfully lobbied the legislature to pass a bill that would have allowed the city council to raise its assessment ratio for apartment properties from 50 percent to as much as 70 percent, which would have provided the money needed to balance his budget.
The assessment rate was lowered to about 30 percent of market value for city homeowners in the 1970s, due in part to encourage homeownership and also because the city had postponed revaluation since the 1950s. Every 10 years in the 1980s and 1990s, and every five years since the revaluation law was changed in 2004, the legislature has passed a bill at the end of each revaluation cycle to keep the assessment at 30 percent in Hartford. The rest of Connecticut's towns and cities -- and commercial businesses in Hartford -- are taxed at the 70 percent assessment rate.
Reprinted with permission of the Hartford Courant.
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