New London — The city’s Board of Finance reduced the city’s proposed budget by more than $440,000 this week, acting on concerns over a drop in revenues associated with the COVID-19 pandemic.
The five-member board met remotely on Tuesday to hear from Finance Director David McBride about projected drops in not only state revenue but in city revenue streams that include permits, taxes, investments and solid waste.
McBride said the financial impact of the COVID-19 pandemic is likely to be similar to the 2008 financial crisis.
“Over the last four months, there’s been a lot of changes and every day we get more information and we’re seeing that our revenue streams are decreasing,” he said.
The board acted on McBride’s recommendation and cut $440,288 from the total budget: $62,147 from the general government budget and $378,141 from the education side. The cut to education comes just a week after the City Council added $175,000 to the education budget.
The reductions bring both proposed budgets to a 1% increase over the current year, $50.46 million total for general government and $44.02 million for education.
The total proposed $94.48 million budget still translates into a 4.48% reduction in the tax rate, McBride said.
Mayor Michael Passero, in his initial budget presentation in April, had called his proposal a product of economic conditions that existed prior to the COVID-19 pandemic. McBride on Tuesday said it has become increasingly clear that the pandemic will adversely impact city finances.
“We’re going into uncharted waters here,” Board of Finance Chairman Walter Williams said.
“It took a long time to build up the contingency fund that we have now and if we don’t put some more money back into that fund, we could be in big trouble. Taxpayers’ mill rates will go up. There’s just no way of predicting where we’re going to be four months, six months … down the road,” he said.
The City Council, which takes up the budget again on Monday, cannot by City Charter increase the budget without approval of at least eight members of the Appropriation Board, which is composed of all members of the City Council and finance board.