June finance report shows $1.6 million general-fund shortfall and $3.9 million medical-fund pressure

NEW HAVEN — City budget staff told the finance committee the June financial report projected a June general fund deficit of roughly $1.6 million and an estimated $3.9 million shortfall in the municipal medical (health) fund, with workers' compensation pressure of about $427,000, producing an aggregate projection near $6 million when combined with other funds. Budget Director Shannon McHugh presented the June figures and said the education estimate in the packet used a May estimate that had not been updated; she told the committee that the city had stronger-than-budgeted investment income and building-permit revenue in June. McHugh said investment income was budgeted at about $1.7 million but came in near $4.85 million (later noted as about $4.9 million), and building-permit fees were significantly above budget, generating multi-million-dollar positive variances. On expenditures, McHugh said department-level encumbrances and purchase orders remain and that staff plan to clear open POs and encumbrances on Aug. 22 to finalize year-end results; a full year-end transfers package would follow and could be presented in September or October. The medical fund pressure reflects higher claim activity month-over-month; staff said they increased budgeted health rates in the FY26 budget to respond to rising claims. What committee members asked: Members pressed for timing and for the rainy-day/replenishment fund status; McHugh said the FY26 budget included an expenditure reserve and that staff would produce a final closing report once encumbrances clear. Next steps: Staff said they expect definitive year-end figures after the Aug. 22 encumbrance close and planned to return with transfer requests and a final result for committee review.