Day of budget cuts arrives
Finance board looking at historic $35M reduction
STAMFORD – The city’s budget deadline is here.
The Board of Finance meets at 6:30 p.m. Wednesday to vote on an unprecedented $35 million budget reduction brought on by fallout from the coronavirus pandemic.
All six finance board members, along with 35 of the 40 members of the Board of Representatives, have vowed to not raise taxes on July 1 to protect residents who have lost jobs, wages and perhaps businesses in the economic shutdown resulting from the pandemic.
To achieve that, city and school employee salaries, which comprise 80 percent of the budget along with benefits, must be frozen for the fiscal year that starts July 1 and the one that follows, city officials have said.
Whether or not employee unions concede to the freezes, the amount of the 2020-21 budget will be determined Wednesday, with finance board members so far recommending cuts to most, if not all, departments. The Board of Representatives votes on the budget June 2, when it may make more trims but may not restore any monies cut by the Board of Finance.
The table for the tough time to come will be set Wednesday night, said Mary Lou Rinaldi, finance board vice chair.
“The money that is available for the next year will be clear then,” Rinaldi said. “Once we vote, we are out of it. It will be up to the unions and the administration and the Board of Education to make a determination about how the cut is applied.”
So far, the largest union, the Stamford Education Association, which represents more than 1,500 teachers, has not been negotiating . Teachers have been calling in to finance board webinars and emailing members asking them to spare the education budget.
Superintendent Tamu Lucero said Tuesday she remains receptive to talks with the teachers’ union.
“We continue to be open to discuss all viable options to ensure Stamford students have the best educational experience possible,” Lucero said. “We remain hopeful that the SEA will return to these discussions.”
Lucero has identified deep staffing cuts across the school system that she has said could be needed to achieve the significant budget reduction anticipated from the finance board. Officials have said those cuts could be substantially offset by the salary concessions sought from the teachers and other school employee unions. The head of the teachers union has said the gap should be filled via other means, including the city’s rainy day fund.
If the SEA, and the other three school employee unions, do not decide in time for Wednesday’s vote, there may be a short window left for negotiations before any cutting of jobs and programs begins.
Teachers are to be notified about their school, grade and subject assignments and other duties “as soon as practicable, and under normal circumstances not later than June 15,” according to the SEA contract.
“Under normal circumstances, it would be our goal to notify all teachers of their assignments by June 15,” Lucero said. “However … the circumstances we currently face are anything but normal.”
The Board of Education ultimately decides which programs or positions to cut during a “reallocation process” that follows the votes by the Board of Finance and Board of Representatives, Lucero said.
Mayor David Martin’s administration appears to face a similar window with the 10 city unions.
“If the Board of Finance votes to cut the city’s budget, the city will be forced to begin formulating and implementing plans that necessarily include layoffs of city employees. This may take a few weeks of consideration,” Martin said Tuesday. “With this in mind, we cannot provide a specific estimate for how long until layoffs must occur, but they could start before fiscal year 2020-2021, which begins July 1.”
Like Lucero, Martin extended hope.
“The city remains committed to negotiating with unions to achieve a budget that meets the cuts directed by the Board of Finance,”
he said.
Martin was optimistic when he proposed his budget in early March, citing a strong city economy. He projected revenues of $630 million, with a spending plan of the same amount, and a tax hike of 4.1 percent. Lucero requested a 6.1 increase in the school budget that would have taken it to $301 million.
But by the end of March Gov. Ned Lamont was issuing restrictions to stop the spread of COVID-19, and Stamford was on the way to becoming the epicenter of the virus in Connecticut.
As the economy worsened, the Board of Finance began what would be weeks of research, using 33 key economic indicators to figure out how much revenue the city could expect to collect in a pandemic economy. They determined it would be $65 million less than what Martin expected, mostly because citizens were losing jobs, wages and businesses and were far less likely to pay their property taxes.
About 95 percent of Stamford’s revenue comes from property taxes. In Connecticut’s other large cities, it’s about 50 percent because they get much more in state aid than Stamford, which has a larger tax base.
Finance board members have determined that $30 million of the $65 million revenue shortfall may be covered by tax payments residents are expected to make after this year, plus fiscal reserves and a $15 million line of credit from a bank.
The remaining $35 million must be cut.
By state law, the school budget cannot be cut below its existing amount. So only Lucero’s $15 million requested increase can be cut – her budget can’t go lower than the $283 million it is now.
If schools account for $15 million of the $35 million cut, the remaining $20 million must come from city operations.
It will be painful, since Martin’s share of the budget, $223 million, is far less than Lucero’s revised request of $298 million.
The overall budget includes $91 million in employee pension and retirement benefits.