$15.5 Million Deficit Appears Hidden in Stewart’s Budget

The city budget proposed by Republican Mayor Erin Stewart has what appears to have a hidden $15,541,294 deficit built into it, a deficit that could continue to re-appear into future budget years.

Stewart’s budget contains two substantial budget lines that are based on short-term assumptions. The first, as the New Britain Progressive reported in April, is the $5,941,294 reduction in the city’s payments on its debts. Stewart has been criticized for borrowing $28 million in order to push payments on the city’s debt from the current year into the future. Her 2017-2018 budget proposal would reduce the city’s payments on its debts in the upcoming budget year by $5,941,294.

But that $5,941,294 reduction in expenditure would be a temporary, rather than a permanent cut, leaving a potential $5,941,294 deficit in future year’s budgets.

Stewart’s 2017-18 budget also relies on $9,600,000 in “Prior Year Surplus” money. The $9,600,000 would effectively be taken against the amount of money in the city fund balance, which is the year-to-year net assets of the city’s General Fund.

Stewart’s 2016-17 budget, the current year budget, also relied on “Prior Year Surplus” money. In that case, $10,000,000 from the 2015-16 budget. However, that $10,000,000 was not shown to be realized revenue in the documentation contained in Stewart’s proposed 2017-18 budget.

Even if the $10,000,000 in budget surplus assumed in Stewart’s 2016-17 budget is fully realized and, for a second successive year, the $9,600,000 she assumes in the upcoming 2017-18 budget year is realized, that $9,600,000 would a one-time amount. If spent, that one-time amount would not be available for future, leaving a potential $9,600,000 deficit in future year’s budgets

The $5,941,294 in temporary debt service reduction and the $9,600,000 use of assumed surplus from previous years appears that it may leave a $15,541,294 systematic deficit embedded in Stewart’s proposed budget.