MARB subcommittee doesn’t approve West Haven 5-year recovery plan, will continue working with city to refine it
A state panel working with the city on its finances opted not to approve Mayor Nancy Rossi’s five-year recovery plan Monday, June 18, but is continuing to work with the city to help it draft a plan that will be acceptable, the state’s budget chief said.
“We did not approve it,” but “we provided some feedback at the meeting” and will provide additional feedback later this week, said state Office of Policy and Management Secretary Benjamin Barnes, chairman of the state Municipal Accountability Review Board.
“I think that I expressed that I wouldn’t personally vote to approve it in its current form,” Barnes said, referring to comments he made at a meeting in West Haven of the MARB’s West Haven Subcommittee. “I felt that there were changes that are necessary. ... I think there was a general consensus that it it was an early draft and they need to do more work.”
Rossi submitted the plan to the MARB on June 7. MARB approval of the plan is necessary before the state can approve $8 million in restructuring funds that the city has applied for for the current fiscal year, as well as $8 million it is applying for for the coming fiscal year.
The plan also assumes that $1.75 million of the $8 million the city has applied for for the current fiscal year will be used for deficit reduction, as the MARB required.
Rossi said she would have liked to have seen the MARB approve the five-year plan but was not surprised that it didn’t happen.
“That’s what I would wish, but I didn’t expect that,” she said. “Did I think it would fly, 100 percent? No.”
But “we listened to what they had to say ... and then we’re going to work some more,” Rossi said.
Barnes said there were a number of facets of the plan that MARB subcommittee members had issues with.
“There were some technical things,” including a discussion about health benefits “that they were not prepared to have yesterday,” Barnes said.
He has said previously that one problem with the city’s budget is that, being self-insured, West Haven never knows exactly how much its health insurance line-item will be until the end of the budget year.
Health insurance overruns have been one of the key drivers of city deficits in recent years.
West Haven had an $18.1 million cumulative deficit as of June 30, 2017, according to the most recent audit. The city passed a deficit bonding package to finance $16.13 million of that last November during the waning hours of former Mayor Ed O’Brien’s administration.
Barnes also said there “were some ‘status quo’ features of the plan” that might benefit from a more thorough analysis of how things might change over time.
As one example, “they’re assuming that the amount of money that they’re spending to provide services will stay the same,” Barnes said. “We just wanted them to think through some of those and make some more realistic assumptions about what things are going to cost.”
In addition, “a realistic plan has to include some level of capital expenditures,” which isn’t the case in the current plan, he said.
The five-year plan assumes a tax collection rate of 98.4 percent, flat state revenues over the five years, no increases in city employees’ wages and that the Board of Education will have annual budget increases of 0.8 percent and that health insurance will rise by 8.4 percent a year, among other things.
West Haven is one of just two municipalities in the state that are under the MARB’s supervision as a result of having bonded to finance past deficits. The other is Hartford. Both are on “Tier 3” status, although MARB members have warned that West Haven could get moved to “Tier 4” status at some later date.
Tier 4 status is a higher level of supervision under which the MARB would have the power to pass and implement an interim budget, raise the city’s tax rate or impose mid-year spending cuts and have greater latitude to approve or disapprove new labor contracts.
City officials have said they hope to avoid Tier 4 status.