Derby Mayor Joseph DiMartino at a tax board meeting on Tuesday, March 19, 2024.
DERBY – Mayor Joseph DiMartino unveiled a $52.6 million budget on March 19 that would raise taxes by 4.6 mills, or 11.9 percent, if approved.
This is the first budget presented by the mayor, who took office in December 2023.
The mayor said previous city budgets were built off bad financial forecasts. A tax increase is needed to start getting Derby back on its feet, he said.
“I certainly don’t want to go up 4.6 mills. Nobody wants to do that. But in order to get out of this hole that we’re in, I think we are around that area,” DiMartino said.
Under DiMartino’s budget, the tax rate would go from 38.6 mills to 43.2 mills.
A single-family house on Hawthorne Avenue assessed at $112,000 would pay an additional $515 in property taxes next year if the budget is adopted as is.
A house on Sentinel Hill Road assessed at $220,150 would pay $1,000 more in taxes next year.
Budget Baddies
The current budget covering July 1, 2023 until June 30, 2024 was created before DiMartino was elected.
The current budget has a $2 million deficit due to under-budgeting benefits by $1.3 million, not budgeting for a $648,000 in sanitation costs, and over-estimating tax collections, DiMartino administration officials said.
DiMartino said that taxes have not increased during the past three budget cycles, and that the city has been draining the reserves to pay for the budget shortfalls.
DiMartino said $4.8 million has been taken from the city’s fund balance – or reserve fund – since the spring of 2021.
Officials said it is a strategy that is not sustainable. Derby is under the watch of the state Municipal Finance Advisory Commission because because of budgeting errors dating back to 2016 and the city’s inability to file financial audits with the state in time.
The New Budget
DiMartino’s proposed budget totals $52,604,449.
Depending on how you look at it, that bottom line represents either a 9.8 percent increase or a 5.3 percent increase in spending.
The $52.6 million DiMartino budget is about $4.7 million (9.8 percent) more than the $47.8 million budget approved by the tax board in April 2023 (the current budget).
But officials said the bottom line approved in April is not reliable, because it doesn’t reflect what the city is actually spending, or the $2 million shortfall.
The current budget is actually an estimated $49.9 million. DiMartino’s $52.6 million budget is $2.6 million (5.3 percent) larger than the estimated current budget.
Derby tax board member Michael Gray asked why the DiMartino budget was not comparing itself to dollar amounts approved by the tax board last April.
“Is the intent because we are trying to use actual numbers that are happening in real time as opposed to maybe some not reliable numbers from the 2023 – 2024 budget?” Gray asked.
New Derby Interim Finance Director Brian Hall said comparing DiMartino’s proposed budget to the budget approved in April “seemed like an unrealistic comparison point.”
“I didn’t want to have people be too overly concerned that ‘Oh wow, it’s going up so much’ versus an unrealistic budget that we all know and have talked about,” Hall said.
Budget Breakdown
The Derby Board of Education asked the city to allocate an additional $1.2 million to operate the schools in the 2024 – 2025 school year.
DiMartino’s budget gives the school an additional $670,000. The school board will likely take $235,000 from a ‘non-lapsing fund’ established in 2019. That’s essentially a reserve fund of money previously allocated by the city but not used by the schools.
DiMartino said the dollar amount was negotiated with the board of education.
DiMartino’s budget anticipates a 12 percent ($50,958) increase in city electric bills.
It anticipates employee medical benefits increasing by $700,000, or 7 percent.
It restores the previously cut $500,000 contribution to the city’s pension plan, bringing the total contribution to $1 million
It adds $50,000 to the tax assessor’s budget for reassessment.
DiMartino’s budget adds about $96,000 to the Derby Fire Department budget. The department’s equipment fleet is old. The budget adds $44,000 for maintenance and repairs.
The budget also allocates money for firefighter turnout gear. The city was fined by the Connecticut Department of Labor’s Division of Occupational Safety and Health (CONN-OSHA) earlier this year for failing to purchase replacement gear. Click here for a previous story.
Next Steps
In Derby, the tax board – an elected group – are responsible for adopting a budget every year.
The board has until the last business day in April to vote.
Prior to a final vote, the board will hold a public hearing.
Click here to track public meetings in Derby.
Gray described DiMartino’s budget as a “reset” for the City of Derby – a painful budget, but one built off reliable numbers.
He worried that in addition to paying more in taxes, some in Derby could be hit again in a future state mandated revaluation.
“It could be a double whammy,” he said.
Derby lowered its mill rate in 2021, then kept the mill rate the same in 2022 and 2023.
Derby Interim Finance Director Brian Hall said the city should have been raising the mill rate by about one mill a year to keep up with expenses.
“Had we been raising by just one mill a year, which is typical for most cities, it wouldn’t feel like such a huge number this year,” Hall said. “You would have gradually eased into it like every other city has done for the last three to four years.”
Gray said the mill rate increase is necessary given Derby’s circumstances.
Derby officials are afraid that the state’s “Municipal Accountability Review Board” (MARB) could take over the city’s finances if things don’t get better.
“Me, personally, I’m not speaking for everybody, but I think it’s a necessary evil to get our budget on track, stay out of MARB, show MFAC that we’re doing something,” Gray said, referring to the state entities looming over the city’s shoulders.
“You may not have a choice,” Hall said. “Because if you didn’t do it, and the fund balance drops to a negative number, then MARB comes in and forces you to do it. So, to some extent, you don’t have a lot of options here.”
To close the deficit in this year’s budget, the Derby Board of Aldermen & Alderwomen recently voted to reduce this year’s contribution to the employee pension plan by $500,000, and to use the money left from Derby’s share of the American Rescue Plan Act.
Click here for an overview of DiMartino’s budget.
Click here for a line item breakdown.
