New London mayor's $105M budget plan calls for tax rate decrease

Yahoo

01-04-2025

New London ― Mayor Michael Passero's proposed 2025-26 city and school budget of $105.6 million would drop the tax rate by 0.30 mill through a series of austerity measures such as not increasing education spending, re-routing surplus funding and eliminating up to 15 municipal employees.
'The goal is to not raid our fund balance and not raise taxes,' Passero said Monday, hours before he unveiled his spending plan to the City Council.
As expected, Passero's budget keeps school district spending flat at $47.4 million. The Board of Education previously approved a $54.7 million budget with $22.5 million covered by state Educational Cost Sharing (ECS) monies. Since ECS funding is not increasing for next year, the school board's proposed budget increase of $7.3 million would be shouldered entirely by taxpayers, Finance Director David McBride said.
Passero is proposing a $58.2 million city budget that is $1.2 million higher than the current budget.
Digging out from a $1.5 million budget hole"
Passero and McBride said the city is grappling with the expected loss of $2.4 million in state funding under Gov. Ned Lamont's proposed biennial budget ― though the city hopes to recoup $1 million of that money ― coupled with another $1 million drop in motor vehicle reimbursements.
"Such a drastic cut in a single fiscal year is nearly impossible to overcome," Passero said.
In addition to the potential state funding loss, the city also has local increases to manage in the 2025-26 budget. For example, McBride said the city is budgeting nearly $500,000 in 2026 — compared to $50,000 this year — to help cover years of owed payments to Ocean Beach Park operators to offset revenue losses the city is required to subsidize.
The police department budget is increasing $1.1 million to $14.4 million due to contractual raises and the hiring of a new deputy police chief and two patrol officers. The fire department's budget is jumping by $526,000 due to contract re-negotiations, while union contracts for public works employees require a $290,000 increase in that department's salary budget.
To offset the increases, Passero's budget calls for funneling $1.75 million in excess revenue from 2024 into a new tax rate stabilization fund. That transfer would preclude poaching from a $24.6 million fund balance, which will contain $19.6 million after a series of planned transfers to a Board of Education non-lapsing fund and other designated areas. Another $500,000 is expected to be saved by not filling employee vacancies this fiscal year.
'That still leaves us with a $1.5 million hole,' Passero said.
City officials plan to institute a 'reduction in force' initiative that calls for working with various unions to identify those full-time workers ― police officers and firefighters are excluded ― willing to take early retirement by July 1. Those retirements will hopefully fill the $1.5 million gap, McBride said.
'The average city employee makes $80,000 a year, so it would take between 10 and 15 employees, once benefits, taxes and other things are included, to reach that goal,' McBride said. 'If there are employees making more than the average who opt to retire, it will require fewer retirements.'
If Passero's budget passes without changes, it would translate to a tax rate of 27.2 mills, down from 27.5.
Tax increase "not a reasonable option"
In his council address, Passero highlighted his administration's continued investments in neighborhoods, parks and open spaces, as well as a commitment to a 'green future' through solar panel projects at the high school and near Bates Woods. He said the city's stock of vacant downtown buildings and empty commercial spaces is giving way to a "thriving urban center" marked by new sidewalks and increased foot traffic.
Passero said said while the local and state housing markets presented challenges, New London has built 800 new units in the last six years, with another 1,300 permitted, planned or under construction.
'Despite our city's recent rise in influence and financial stability, the budget I deliver to you today is extremely grim,' Passero said. 'It requires that we adjust our expenses to match a substantial drop in projected revenues.'
Passero said it will require a "renewed commitment" to meet budgetary challenges. He said with 60% of New London families living paycheck to paycheck ― and 20% below the poverty line ― raising taxes was "not a reasonable option" this year, even to offset potential state funding losses.
"I intend to double-down on the strategy of growing the tax base and recruiting investment to ease the local property tax burden," he said. "The strategy will remain: more taxpayers, not more taxes.
The City Council's Finance Committee will meet with city department heads next week to discuss their respective budgets. The Finance Board will meet in late April ahead of the council approving a budget on May 12.
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