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Derby Mayor Richard Dziekan.
DERBY — The following letter was sent by Mayor Richard Dziekan:
First off, I understand the frustration of Derby residents over the 1.99 mil rate increase approved by our Tax Board. There is never a “good” time to raise taxes. I am a homeowner in this city, and I am personally affected by the taxes going up.
I want to clarify some things about the driving reasons for the increase, especially because I have seen a lot of misinformation circulating online. This is not political. It is merely a statement to ensure taxpayers are informed about the way the city operates.
As you may know, the Tax Board receives initial funding requests from all the city departments and a report of all the city’s fixed costs (for instance, we pay $255,838 per year to have fire hydrants and $232,000 per year for street lights). Then the Board gets to work on a “deep dive” into each department and what it needs to operate.
The City Charter affords no role in the budget process for the Mayor, but my staff and I follow the process very closely. The responsibility for the budget rests solely with the financial staff and the ten elected members of the Tax Board who adopt the budget by voting. I say this not to “pass the buck”, but to inform you of the process. My background as a veteran and police officer qualifies me for many things, but budgetary math is not one of them.
This year, the initial request would have resulted in a 4.23 mil increase in your taxes. After a lot of hard work by the finance staff and many long Zoom meetings with the Tax Board, that number was whittled to 1.99 mils.
Some of the major drivers of the increase include the following:
Education Funding. There was an increase to the Board of Education of $460k. The original request from the Board of Education to the Tax Board was $680k. After two years in a row of getting zero increase, the Board of Education was in a tough situation, and the Tax Board was in an even tougher one. We can all agree that education is a very important element of the city services we offer. The Tax Board determined that an increase was required to sustain the quality of Derby’s educational programs and services.
Increasing Union Contracts. The main continued rising cost we will see and continue to see year over year is the contractual obligations for Union employees like salary increases and health insurance. At the schools, where we employ 300+ union employees, this is a very difficult trend to keep up with. While my staff and I worked with the Unions to agree to take a 0% increase in their rates of pay last year, such increases cannot be held off indefinitely.
Green Energy Investment. There is an upfront lease payment of $500k for new equipment in the schools and city buildings, including but not limited to Air Conditioning at Irving School and City Hall that will be paid for by other energy savings like our city-wide conversion to LED bulbs and the installation of solar panels on our school buildings. In the short term, there is an upfront cost, but in the long term, the city will greatly benefit from this project. We will end up budget-positive on this project once grant money from the state and rebates from utility companies come through.
Fund Balance Replenishment. The city made a commitment to the State and the credit agencies to add money to our fund balance (rainy day fund/savings account) as well. This year’s budget includes a $300,000 boost to the fund balance. Without this commitment and the other measures outlined in our city’s 8‑point plan to financial recovery, we would be downgraded in our credit rating and the long-term cost to the taxpayers would be catastrophic.
There is little to no increased spending on the city side of the budget, but there is also very little increased revenue. The new budget does include a new $75k “grant match” line item that will allow staff to apply for state and federal grants that require a local contribution. In other words, we as a city often have to pay for engineering or design fees for large projects that can be funded by the State or the feds, but in years past we have foregone the applications because we have no money to pay the 5 – 10% fees. These are the types of projects that will allow for improved infrastructure like sidewalks and roadway improvements.
Here are some of my thoughts as to what we can do to prevent future tax increases:
First, we need to continue the progress in growing our city’s grand list. Increased revenue through new business and the sale of underutilized properties will help lift the tax burden off the backs of our residents and existing business owners. The city’s largest employer and landowner is Griffin Hospital, which is tax-exempt. We are fortunate to have Griffin and all the wonderful services they offer, but it comes at a cost. We do get grant money for being a “hospital town” but compared to the tax revenue Griffin would generate if it were assessed for taxes, this grant money is a small amount. Between Griffin’s footprint and that of Osbornedale State Park, we have very little developable land left in the city. It is very important that the development of that land (including our Main Street) be carefully considered and thoughtfully completed.
In the past year alone, we have sold the old VARCA building and brought in $400k and a new business, we have brought in a fuel cell project that will bring in $4 million guaranteed over the next 20 years and are exploring an additional fuel cell on the Public Works property that could bring an additional $1 million. We have the private development on Factory Street approved by Planning & Zoning and ready to begin, creating new businesses and residences downtown. Road B behind BJ’s was just sold for $325k and an industrial development plan has been approved.
Second, we need to take an extremely serious look at regionalization of city services. We are more than two years into a study on regionalizing the school system with Ansonia and it is time to push that forward AND look at other options with surrounding towns like Shelton who has enough empty seats in classrooms to accommodate Derby High School’s student population. This may not be a popular opinion among families with High School age children, but as a city, we cannot sustain the current model and quality of education.
Finally, we can all agree that another major factor in our lack of progress as a city is the delay in the State of Connecticut’s Rte. 34 Widening/Main Street Improvement project. This single project is the lifeblood of Derby’s future economy, and it is nearly within reach. The utility work for this project has already begun and we anticipate the major construction to start in the Spring of 2021. I know you have all been hearing the same story for 30+ years, so you will only believe it when you see it, but I can assure you, it is coming. In addition, the Derby Shelton Bridge is being improved and renovated to help with our connection to downtown Shelton.
My staff and I are working together every day to make the city better, but when I walked in the door of City Hall two and a half years ago, there was a NEGATIVE fund balance. Until we can create some new revenue and development, the tax burden unfortunately lies with residents and property owners like you and I.
In closing, I appreciate your frustration and share in your desire to keep taxes from rising, but it is safe to say that this year’s tax increase could not have been avoided with all the factors working against us as a city.
While political bickering remains popular on Facebook, I can assure you that is has no place in our city’s budget process. Derby’s future will depend on hard-fought, honest solutions to problems that have festered for decades. I want residents to know that City Hall remains committed to both the fight and our future.
Mayor Richard Dziekan
Mayor of Derby
