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New London's dilemma

Published November 28. 2012 4:00AM

No one should be surprised.

New London Mayor Daryl Justin Finizio warned that the city was entering the fiscal year with a budget that had dangerously thin margins for error. And that was before voters rejected the budget and forced more cuts to reduce the tax increase to 5 percent.

The 2012-2013 budget of $41.3 million was a $700,000 decrease over the budget approved for the previous fiscal year and roughly $2 million less than the city actually spent that year. Successive years of operating budget deficits almost eliminated the fund balance that had served as the city's fiscal cushion.

New London needed everything to go right. It hasn't. State PILOT funds - partial payments the state makes in lieu of the property taxes tax-free public and nonprofit properties in the city would generate - fell $241,000 short of expectations. With little construction activity, building permit fees, estimated to produce $475,000 over the course of the year, brought in just $22,000 during the first quarter of July to September.

On the spending side, the fire department is headed for a $650,000 shortfall if trends continue, according to Finance Director Jeffrey Smith. Driving that projected overrun, at least in part, is a substantial increase in sick time, requiring more overtime pay to meet minimum staffing requirements. The administration needs to take a hard look at why that is happening.

Add it all up, said the finance director, and it projects to a $1.1 million deficit by the end of the fiscal year June 30.

While the outlook could change, and should become clearer when the city reaches the halfway point in the fiscal year come January, it appears certain Mayor Finizio will have to find more spending reductions. That will not be easy. The fire department has contractual staffing requirements. The police department is already understaffed, and arguably public works as well. And wintertime, with its associated snow-cleaning costs, is yet to start.

No one is talking about a supplemental tax increase, which is wise because it would invite a taxpayer revolt.

While some spending decisions by the mayor are open to criticism, this largely remains a problem his administration inherited and one that will be difficult to dig out from.

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