New Haven Register (New Haven, CT)
Mayor: Audit shows city ‘headed in right direction’
WEST HAVEN — The city’s financial picture is getting rosier, according to a recently completed audit of the 2020 fiscal year, although one Republican on the City Council urged “cautious optimism.”
Mayor Nancy R. Rossi said state restructuring funds have “assisted us greatly in our recovery,” but those funds
will phase out next year. City finances currently are under the control of the state’s Municipal Accountability Review Board and the restructuring funds represent millions of extra dollars contributed by the state.
“Our work is not done but we have made great progress and are headed in the right direction,” Rossi said in a statement.
The independent audit was done by BlumShapiro for fiscal year ending June 30, 2020; BlumShapiro has since merged with CliftonLarsonAllen LLP.
The city’s general fund ended the fiscal year with positive operations of $2.2 million, boosting the rainy day fund to nearly $3.6 million, according to the audit and Rossi.
Also faring well were the city’s other major funds, with the Allingtown Fire Department finishing with a $766,466 surplus and the Sewer Fund a surplus of $1.7 million.
The city’s long-term debt (bonds and clean water notes) decreased by $16.5 million during the audited period, Rossi said.
“I am thrilled that we were able to have the audit on time (for the first time in 10 years) and I want to thank our city and Board of Education staff for their efforts making it happen — it is important to me and the city,” Rossi said, noting it is the third consecutive audit reflecting positive financial operations.
“The city has implemented necessary structural changes, responsible budgeting techniques and fiscal accountability,” said Rossi, a Democrat.
But City Council member Barry Lee Cohen, R-10, expressed “cautious optimism” about the favorable audit.
“I recognize and respect the tough decisions that were necessary that have allowed the administration to report a favorable audit. However, please make no mistake: our general, rainy day fund surplus is predominately due to the infusion of millions of dollars in MARB funding that has helped to keep our city afloat these past four years,” Cohen said.
“This positive audit should not divert attention from the dismal record of economic neglect West Haven has evidenced,” Cohen said. “This is further witnessed by declining building permit revenues projected for this fiscal year.”
The introductory pages of the audit say the city was responsible for submitting data and there were “no significant difficulties in dealing with management in performing and completing our audit.” The city also maintained a BBB credit rating from Standard and Poor’s Investor Service, the audit states.
According to the audit, West Haven derives 47.3 percent of its revenues from grants and contributions, 45.1 percent from property taxes, 7.4 percent from charges for services and 0.2 percent from investments and gain on sale of capital assets.
As far as expenses, the audit reports, 57.4 percent were related to education, followed by 20.5 percent for public safety, 12.2 percent for public works, 4.7 percent to general government, 2.8 percent to interest, 1.2 percent to human resources, health and welfare, 0.7 percent to parks and recreation, and 0.5 percent to the library.
The audit lists “significant revenue and expense changes” from the previous fiscal years as:
Operating grants and contributions increased by $3.9 million because of education grants.
Capital grants and contributions decreased by $5.3 million primarily due to a reduction of approximately $4.5 million in school construction grants received.
Property taxes increased by $2.4 million due to the increase in the budget and the amount funded with property taxes.
The decrease of $1.8 million in grants and contributions not restricted to specific programs was due to a decrease of $1.9 million in the state municipal restructuring fund grant received.
The allocation of certain revenues and expenses across functions has been realigned in the current period. This has resulted in a $7.9 million increase in public safety expense, and the $13.1 million decrease in education in education expense.
City Treasurer and Democratic Party Chairman Mike Last said the city has “really turned a corner with positive operations in three consecutive fiscal years and the outlook for the current year is also encouraging.”
“Our major fund balances are all healthy and continue to grow,” Last said. “”We have dug ourselves out of a massive hole and are finally in a position to stabilize our mill rate and begin investing in our city’s aging infrastructure. This latest audit will also help us in our effort to continue improving our city’s bond rating.”
City Council Chairman Ron Quagliani, D-At Large, said the audit “displays the continued improvement of our fiscal and municipal operations in West Haven.”
“We remain committed to being fiscally responsible, while addressing some of our long-standing audit problems. I am happy to see that we have made significant progress with prior audit issues, and that this latest audit has no repeat audit findings,” Quagliani said. “The city is moving in the right direction, but by no means is our job done, there is still a lot of hard work ahead of us. We are committed to continuing the progress we have made.”
The city’s unemployment rate at the time of the audit was 11.5 percent, higher than the state average of 9.8 percent and the national unemployment rate of 11.2 percent, but the higher than normal rates were a “direct result” of the coronavirus pandemic, the audit states.
Also on the coronavirus issue, the audit notes that is unsure what the affects of the pandemic will be on the city’s healthcare costs, changes in interest rates, investment valuation and the future federal or state fiscal relief.
While West Haven has not experienced a significant amount of tax delinquency because of COVID-19, “the situation creates uncertainty about the impact of future revenues that might be generated,” the audit states.
“As I have stated in the past, West Haven needed to focus on and fix its fiscal situation before we could expect substantial development opportunities and the needed investment in our aging infrastructure,” Rossi said in her statement. “Just like any struggling household would respond, we made some difficult sacrifices and went without for a bit. Our efforts have been successful and now the city is in a position where we are seeing a flurry of interest from developers and investors.”
She added, “We have already begun to roll out our long-term plan to make the necessary investment in our aging municipal infrastructure, which includes our roads, bridges, sidewalks, parks and athletic facilities.”
She said the priority will be to continue to market the city, grow the commercial grand list to stabilize the tax rate and “make West Haven a better place to live and raise a family.”
Rossi said her administration is working with the state legislature to establish an Enterprise Zone, finishing the revitalization of the Allingtown section of the city, obtaining Special Taxation District status for the Haven, completing the new high school and developing the Savin Rock Conference Center over the next year.