West Haven council approves budget, then opens $1.4 million hole in current budget by not passing tax lien sale

Mayor Nancy Rossi addresses the City Council before the council votes on a budget Tuesday, May 29.

Mayor Nancy Rossi addresses the City Council before the council votes on a budget Tuesday, May 29.

The City Council, with the chairman of the state review board working with West Haven on its finances sitting in the front row, finally managed to cobble together enough votes to pass a compromise 2018-19 budget in a special meeting Tuesday night, May 29.

The council, with 11 of its 13 members present, unanimously approved the budget that Mayor Nancy Rossi and City Treasurer Mike Last hammered out with Council Chairman Ron Quagliani, D-At Large, and council Finance Committee Chairwoman Louise Martone, D-10.

The meeting, moved downstairs into the Harriet C. North Community Room, was attended by nearly 100 people, many of them city and school union members.

Then, in a subsequent regular meeting, the council failed to muster the 7 votes necessary needed to move forward with a long-planned $1.4 million tax lien sale that former Mayor Ed O’Brien and the previous City Council had relied on to balance the current 2017-18 budget.

Without the sale, West Haven will face a $1.4 million hole in the current year’s budget, Rossi said. The vote was 6-3, with seven votes necessary to approve the sale.

The current fiscal year ends June 30.

The council failed to muster the nine votes to make changes to Rossi’s recommended budget during the regular budget process.

It adjourned its budget deliberations without passing a budget, which let Rossi’s $162.86 million recommended budget go into effect by default — but with a $3 million hole because its counted on $3 million in MARB money that later proved not to be available for operations.

The budget passed Tuesday contains a number of cuts and raises the citywide tax rate, not including the additional tax rate for fire service, by 1 mill, from 35.26 mills to 36.26 mills. Each mill represents $1 per $1,000 of assessed property value.

The Allingtown fire tax rate, the only one the city controls, will rise to 13.06 mills.

Had the council not passed a budget before the June 7 meeting of the state Municipal Accountability Review Board, West Haven might have faced the possibilty of the MARB pushing the city from its current Tier 3 status to Tier 4, which would have meant a further loss of local control.

State Office of Policy and Management Secretary Benjamin Barnes, who is chairman of the MARB, told the council that he would recommend that the MARB move West Haven to Tier 4 if no budget was passed by then.

Tier 4 is under the law the most severe level of oversight,” he explained.

That would have given the MARB, which already has the power to reject labor contracts and bounce budgets back to the council, additional powers. Those include the power to pass an interim budget and set its own tax rate for the city,

While it would also “preempt the normal arbitration process for open labor contracts,” Tier 4 would not, as previously reported, give the MARB the ability to open up already-in-force labor contracts, Barnes said.

The council vote was preceded by a plea from Rossi, who said the budget put before the council was a true compromise that represented “pieces of all of the budget” previously presented.

“Everybody didn’t get what they wanted, but everybody got something,” she said. “I think it’s a very special document because everbody came together” to forge it.

Among things, the budget changes the way educational grant money held by the city is handled, going straight to the Board of Education rather than into the city side of the budget.

The budget also reduces library funding by $75,000, of which $25,000 has been put in a contingency account.

“We asked the library to go back to their board” to discuss it, because in the years to come, as the city works to get back on firm financial footing after years of deficits, “we are not going to be able to provide the same level of support that we have been,” Rossi told the council.

She said her administration has used conservative numbers to calculate the budget “and I will continue to use conservative numbers going forward.”

“It looks like we’re on the right path with this new budget,” said the council’s one Republican, Councilman Richard DePalma, R-At Large — who also was one of three council members who later voted against the tax lien sale, along with Martone and Councilman Aaron Charney, D-3.

But, “I think there should have been more cuts,” DePalma said.

For the proposed tax lien sale to high bidder Cazanovia Creek Tax Lien Fund LLC of Charlotte, N.C., Charney said he was against it because he felt it unfairly targets some of the city’s most vulnerable residents, including elderly residents and minorities.

He said there was one person on the list who only owes just over $80.

Charney, a lawyer, also said he thought the city would be better off if it “could cut out the middle man” and hire its own lawyers to collect unpaid back taxes, rather than accept a lump sum from an outside firm.

Martone said later that she was against the sale because she didn’t think the way the city wanted to do it was fair. She said she felt the list of properties was hand-picked, with some property owners that were higher than some of those on the list not included.

Charney said later that he would be willing to vote for a tax lien sale this year if the city were to remove the smaller amounts and look into changing its use of the practice for the future.

Two council members who had been at the earlier meeting on the budget, Councilman Nick Ruickoldt, D-2, and Tracy Morrissey, D-8, had left by time the vote came on the tax lien sale.

Two additional council members, Bridgette Hoskie, D-1, and Robbin Watt Hamilton, D-5, were absent as a result of what Rossi said were longstanding plans for out-of-town travel.