No one can say the New London mayor did not warn us.
A few weeks after taking office, Mayor Daryl Justin Finizio announced that the city confronted a serious fiscal problem. Working with Finance Director Jeffrey Smith, Mayor Finizio said it had become apparent that past policies had created a structural deficit. Unrealistic revenue projections and low-ball spending estimates made balanced budgets impossible, he said.
"Constant dipping into our fund balance, knowingly underfunding easily predictable line items, and years of refusals to raise taxes, over the contrary recommendations of city managers and the constant inflationary increases in the cost of government, are the causes of our current budget crisis," said Mayor Finizio, returning to that theme in his State of the City Address on Monday.
An audit found that the 2010-11 budget for the fiscal year ending last June 30 finished $1.3 million in the red. The city's 2011-12 budget compounded the problem with a $1 million increase and no matching hike in taxes. Despite a hiring freeze on non-essential employees, the refinancing of debt and limits on new purchases, the city faces a projected deficit of about $3 million for this fiscal year.
Starting with a large built-in deficit certainly presented the Finizio administration with a serious challenge as it prepared a budget for the next fiscal year that begins July 1.
"Those realities should prove painful and the remedies controversial," we wrote in a Feb. 20.
Little did we know then how painful and how controversial.
On Monday Mayor Finizio proposed to the City Council an $87.1 million budget that would increase spending 6.4 percent and require a nearly 20 percent tax increase, with the tax rate jumping from 25.31 mills to 30.28 mills, a 19.6 percent increase. That amounts to a $746 tax increase on a home assessed at $150,000.
While we credit Mayor Finizio for forthrightly addressing the fiscal problem and, in his words, presenting a "budget that is balanced honestly," he did not present a budget that is realistic.
The mayor's budget would increase the city's operating budget by 8.5 percent. Add in spending on debt, and the increase comes to 9.6 percent. Mayor Finizio is asking for a 3 percent increase for the Board of Education, half the increase the board sought.
The total increase in spending for city services and education is 6.4 percent, or $5.25 million.
Even accepting the argument that past councils had underfunded city departments, we can see no justification for the proposed 8.5 percent hike in the city's operating budget.
This is a spending plan that will not and should not win council approval. Even if somehow it did, voters would petition it to referendum and defeat it.
The proposed budget would place an unacceptable burden on homeowners in the city, already the most heavily taxed in the region. The owner of that modest home assessed at $150,000 would get an annual tax bill of $4,542. The proposed tax increase would further depress the city's struggling real estate market and persuade more residents to move elsewhere.
Perhaps the mayor sees this as his opening gambit, a point from which he can compromise. If it's a negotiating ploy, it's a foolish one damaging to his credibility.
Mayor Finizio must work with the council to reduce this spending plan significantly; even it means some reduction in city services. A tax increase may prove necessary, but the goal must be one that is far smaller than the mayor proposes.
As a recreational boxer, the mayor should know better than to lead with his chin, which is what he has done here. He better be prepared to go the distance, because he has invited a budget fight that will last many rounds.