Mr. President, Honorable Leaders and Members of the City Council, Madam Clerk. City Officials, Department Directors, Employees, and my fellow Danburians:
In accordance with my duties as Mayor and those prescribed by the Charter of the City of Danbury, I respectfully present my proposed budget, and the Comprehensive Capital Improvement Plan for the 2013-2014 fiscal year.
As always, I want to take a moment to thank the members of our legislative body of our city, the members of the City Council and its leadership. Our City Council spends hours working on the City’s business in a voluntary capacity and it is much appreciated.
In the coming month, they will be giving up their weekends and their evenings to deliberate over this body of work. For their dedication and commitment we should all be thankful.
Special thanks to our Director of Finance David St Hilaire, Assistant Director of Finance Dan Garrick, Acting Assistant Director of Finance Director Sue Kaminski, and Judy Baris - our budget specialist. They have created an outstanding document that we all can be proud of.
Last year during my budget address I presented several challenges that stressed our city in terms of long term benefits and unfunded/underfunded long term liabilities. This year I am pleased to report that the contracts that were adopted by you two years ago will provide long term savings for our city budget that will result in unprecedented savings for our taxpayers. However, in the short term, our budget remains under intense pressure for necessary pension contributions as well as escalating healthcare costs due to skyrocketing insurance premiums.
While the City of Danbury is currently on strong financial footing -- with a AAA Bond Rating and healthy reserves, I am deeply concerned about the next several years, and as such, tonight I will propose a number of program changes and initiatives to begin the process of making structural changes to our city government to avoid the mistakes that other cities have made while faced with similar challenges.
Some of those challenges include, but are not limited to the following:
While out performing every major index, our City Pension system has come under a tremendous amount of pressure due to the collapse of the stock market in 2008-09. Because of decline in the stock market, the required contribution to the various employee pension funds to meet our contractual obligations in the future will be very difficult for us to sustain.
For example, in 2008-09 the city was required to contribute approximately $2.2 million towards our pension obligation. In 2012-13 we were required to contribute approx. $9.5 million towards the various pension funds.
If no changes had been made to our current pension system, take a look at this chart for the coming years:
Since we have implemented a new pension system - in some cases a defined contribution plan and in other cases (Fire) a new, less expensive defined benefit plan, I can report to you that our annual required pension contribution for next year has dropped by approximately $300,000 from last year. If you consider that in the previous chart our expected contribution for 2013-14 was to be $11,084,000, the changes that we have made have resulted in a $1.8 million savings for the City of Danbury.
Obviously the required contributions are putting tremendous financial pressure on our taxpayers at time when they can least afford it. And, the required contribution will have a negative impact on our ability to fund our schools, support our infrastructure, and deliver key city services in the future.
That’s why tonight I am proposing that we adopt a Retirement Incentive Program that will deleverage our existing pension system of what could be tens of millions of dollars of pension payments to the pension fund.
Over the last several months we have been working on a creative way to allow qualifying employees (those who have reached the magic number of 75) essentially cash out of the existing system - without saddling the city with future pension payments. There are almost 100 potential retirees who meet the criteria to enter into the Retirement Incentive Program.
Once the Retirement Incentive Program has been completed, the city will then embark on a reorganization process that will look to combine departments, realign reporting, and utilize the new CRM system that is in the process of being rolled out citywide.
We are setting a goal of $1.5 million in savings in direct operational expenses once the reorganization has been completed, and we estimate that we will save tens of millions of dollars in pension contributions over the next 25 years.
In addition, health care costs for our employees and retirees have increased dramatically over the last several years. In 2004-05 our Health Care costs were almost $9 million, this year, those costs have escalated to $19.7 million. Our initial projected premium increase for health insurance for our employees next year is almost 26%.
Our 2013-2014 budget will provide enough reserve to self-insure if we are unsuccessful at reducing the premium that has been quoted to us. Even with 46% of our employees now in a HSA plan, employee and retiree health insurance continues to be a large driver of our budget increase.
The State of Connecticut’s unsettled financial situation and Governor Malloy’s proposed budget have created a significant amount of stress on our budget as well..
Most notably, the proposed elimination of the motor vehicle tax without replacement of the approximately $11 million in revenue it represents would be devastating to our budget and cause us to raise our mill rate by two mills beyond what is being proposed tonight.
The Governor’s proposed budget also places much needed education money in the Alliance Grant category. While on paper it shows Danbury getting a significant increase in state aid for education, the reality is that we must spend more money to access the grant money. Incredibly, we are being asked to create new education programs - at a time when we are struggling to pay for our existing programs.
Finally, the elimination of PILOT money in the Governor’s proposed budget creates a significant hole in our budget - at a time when we can least afford it.
Our 2013-14 spending plan assumes the worst will be handed to us by the State of Connecticut, and with the exception of the elimination of the motor vehicle tax or some other catastrophic decrease in state aid, we should not have to retool the budget if any of the Governor’s proposals make it into the final state budget.
STATE MANDATED RE-EVALUATION:
The State of Connecticut requires us to conduct a physical reevaluation of all properties in the city every 10 years. This year’s reevaluation showed a loss of approximately $2 billion in our grand list. In addition, because of the uneveness of the re-evaulation (some properties dropped, some went up) it is impossible to make a blanket statement about the impact of the re-evaluation.
The 2013-14 mill rate is set at the rate that will provide the most tax relief for the greatest amount of our taxpayers. Under the proposed 2013-14 spending plan, 60% of Danbury’s property taxpayers will see no property tax increase.
The initial 2013-2014 budget requests totaled $235.8 million, which is an increase of $15.7 million from our current budget. After careful review and many hours of work, we have reduced the overall increase from $15.7 million to $7.25 million or 3.3% over the 2012-13 budget..
City department operational spending will once again be flat.
This year, we are currently deferring the hiring 56 positions saving $3.0 million in our current year budget, of those 56 positions, for next year, I am recommending leaving 25 positions unfunded for the 2013-14 budget with a savings of approximately $2.0 million.
With the exception of those raises that are required by contract, I have not included raises for our senior staff - I do reserve the right to make salary adjustments throughout the next budget year if savings targets can be met by individual department heads.
I am also recommending that we begin a city wide study of all city owned assets to determine the role of those facilities and to determine whether or not it would make more sense to sell those to generate property tax revenue in the coming years.
As Connecticut’s safest city, The 2013-2014 budget continues our commitment to Public Safety. For example, we will continue to invest in the Air-Pac replacement program for our firefighters, continue the roll over of our patrol vehicles, and replace the mobile data terminals in our public safety vehicles. In addition, we have programmed funding for the leasing of a new ladder truck. Finally we have programmed more funding for overtime in our public safety departments in anticipation of school security needs.
Over the last several years we have begun to see a significant positive trend in many of our test scores for the Danbury Public Schools. We have also embarked on a voter approved building expansion program to reduce class size which will help continue the positive trend - and increase our property values.
The 2013-14 budget proposes an increase in funding for our schools of $3.1 million which is broken down in the following categories: $2.5 million increase in direct funding, an elimination of the reimbursements from the BOE to the city of $353,845, and an added $250,000 into the Capital account for their Technology Improvement Program.
As you are aware, last year we expanded all-day kindergarten at Great Plain School, Park Ave. School, Pembroke School, Hayestown Ave School and Morris Street School, this has been one of the most important initiatives in our public school system that we can do to help close the achievement gap.
This year the 2013-14 budget funds expansion of all-day kindergarten to King Street Primary, Ellsworth Avenue, and South Street School.
While the proposed budget does not represent the full request of the BOE, I believe that after December 14th 2012, when all of us in Western Connecticut were rocked by the horrific tragedy that took place in Newtown, the Danbury Public Schools must use some of the new funding we are providing to continue the School Safety Advocate Program at our Elementary Schools.
The new money will also be used to fund an expansion of mental health services in our schools to help identify at risk youth for intervention.
In addition, once our school security survey has been completed, I will propose a series of modifications to our buildings to enhance school security. While the Legislature is still working on their school safety initiatives, these modifications may be eligible for reimbursement through a proposed State of Connecticut school safety grant.
All told, close to $1 million will be spent on direct security and services for our students in the aftermath of the horrific event in Newtown.
Providing a safe learning environment for our children is one of our fundamental responsibilities. While recognizing that these are difficult financial times - given the tragedy at Sandy Hook Elementary School on December 14th 2012, - we cannot waiver.
SOCIAL SERVICE AGENCIES:
This year I am not proposing any reductions to the United Way grant agency program. Over the last several years we have reduced this line item. At this point it’s my recommendation that we pause and allow our social service providers to continue to look for opportunities to merge and to become more efficient at what they do.
This year we are programming $6.5 million in our comprehensive capital program. $3.5 million is programmed in the budget on a pay as you go basis. This approach will help limit further borrowing for items that in the past have been borrowed for. In this part of the budget we have programmed items such as IT equipment, patrol vehicles in the Police Department, traffic signalization, and the airport master plan.
The remaining $3 million in borrowing will consist of a roof replacement at Morris Street School, Still River drainage improvements, and work on the Charles Ives House.
Finally, as we are all painfully aware, our city roads took a beating this past winter. To that end I have created a $2.2 million fund (some from notes, some from operational dollars) to jump start our paving and drainage program for this summer.
SEWER AND WATER:
This year I am proposing no increases to our sewer and water rates.
There are some key budget assumptions that I want to point out to you.
While the closing of the 13 acres on the Westside has not taken place, we have not assumed any revenue from this sale. The 2013-14 budget does not assume any one-time revenue to balance the budget.
As mentioned, we have begun funding capital expenses in the budget on a pay as you go basis.
We are also assuming that the elimination of the motor vehicle tax will not take place, should the Governor be successful in implementing the elimination of this revenue stream without a plan to replace it, it could result in a catastrophic tax increase, or a draconian reduction in services.
To implement our budget, I am proposing an increase to our mill rate to 26.80 - the increase is primarily due to the reduction in our grand list from the re-evaluation.
With exception of education spending, the philosophy of this spending plan is to cut first - revenue second.
Every single department will feel the impact of our cuts. We have left no stone unturned in our search savings and our search for revenue.
It is only after we have completed this work can we then ask for a greater contribution from our residents.
Make no mistake, our city departments will have a difficult time getting through the next fiscal year.
But, we believe to make even greater cuts would be irresponsible - potentially jeopardizing public safety
Finally, we will continue the tax freeze for our senior citizens.
As I mentioned before, 60% of our taxpayers will see no tax increase.
I am proposing no increase to our sewer and water rates.
In summary, the proposed spending plan for the 2013-2014 fiscal year will be challenging and difficult for our departments as well as for our residents.
I am proposing eliminating 25 vacant positions for a savings of approximately $2 million.
By eliminating these positions, we are avoiding the possibility of layoffs for this year.
I am not proposing any new fees or surcharges.
I am proposing a long term cost avoidance measure in the Retirement Incentive Program that I believe is visionary and forward thinking - and will help us begin a redesign of city government.
I am not proposing any cuts to our service providers and to the United Way grant agency process.
Through our Comprehensive Capital Plan we are introducing energy efficiency projects for our schools and our public buildings that will save on heating and cooling costs.
I have set aside $2.2 million for road repair and drainage improvements after a long and difficult winter.
We are continuing our expansion of all-day kindergarten with addition of of 3 more schools, South Street, King Street Primary, and Ellsworth Avenue, a huge step in closing the achievement gap for our students.
We have programmed almost a $1 million for school safety and security personnel as a result of the horrific tragedy at Sandy Hook
We are also expanding our mental health services in the Danbury Public Schools as a direct result of the events in Newtown.
Tonight, I ask the for Council’s cooperation as they deliberate over this plan. While today, our finances are on firm financial footing, we must have the political courage to make the necessary structural changes to avoid the problems that other cities of similar size have faced.
Ladies and Gentlemen, I believe in Danbury. I believe in our residents, our employees, our business community, and our faith based community.
We are blessed with so many assets. A world class Hospital, a tremendous University, a vibrant business community, and a quality of life that we can all be proud of.
We boast the lowest unemployment rate in the state, we are the safest city in Connecticut.
The challenges that I have outlined will be difficult, but if we make the decisions reflected in this spending plan, we will be able keep Danbury moving forward.
Because I believe that our best days lie yet ahead..
God Bless America and God Bless the great City of Danbury.