Mayor presents FY 2026 budget calling for $1.5 million in cuts after state reimbursement losses

Mayor Passer presented a proposed fiscal year 2026 city budget at a special New London City Council meeting, telling the council the plan aims to close a roughly $1.5 million shortfall caused largely by an anticipated $2.5 million reduction in state pilot reimbursements and changes to motor vehicle valuation.

"Pilot is a debt the state owes to our city," Mayor Passer said, summing up the budgetary pressure the administration says the city faces as state reimbursement levels shift.

The proposal holds the Board of Education appropriation at the same level as FY 2025 and leans on three primary revenue tactics to balance the city books: placing $1.75 million into a mill rate stabilization fund from FY 2024 excess revenues, pursuing roughly $1 million in additional state aid the administration is still seeking, and realizing $500,000 in current-year savings from austerity measures. Finance Director David McBride told the council the administration still projects a $1.5 million gap that the budget addresses through a planned reduction-in-force (RIF) initiative and other personnel savings.

McBride said the city's unaudited fund balance as of June 30, 2024, was about $24.6 million, of which roughly $4.9 million is designated for specific purposes, leaving a revised undesignated balance the administration presented as $19.6 million. He noted the city remains within its stated fund-balance policy but said national guidance from the Government Finance Officers Association and bond raters recommends larger reserves than the city's current target. "We are not meeting the fund balance goal of 2 and a half months of operating expenses," McBride said, urging caution about using reserves to cover recurring costs.

The presentation included other revenue impacts the administration cited: a $20 million decline in the motor vehicle grand list that reduces motor vehicle tax receipts by more than $500,000 under the administration's estimates, and an expectation that newly enacted valuation methodology changes will continue to affect collections. McBride outlined the citywide appropriation total and explained how the proposed mill rate of 27.2 mills was calculated from projected taxable grand list figures and other adjustments; the administration said this represents a slight decline from last year’s rate of 27.5 mills.

On spending, McBride said the mayor's proposal keeps the Board of Education budget essentially flat while making targeted increases in public safety and other areas: three additional full-time equivalents (FTEs) were added to the police department in the budget, and the fire department's proposed increase largely reflects COLA and step increases rather than new positions. The administration also budgeted a roughly $450,000 payment to Ocean Beach Park to address prior operating losses, and flagged increases in citywide debt service and insurance costs.

To close the remaining $1.5 million gap, McBride said the administration plans to pursue voluntary early-retirement offers and other personnel actions that would reduce headcount or replace positions at lower cost. He characterized the RIF approach as the primary mechanism to reach the target but said the exact mix of retirements and position eliminations was not finalized.

Mayor Passer and staff framed the budget against examples of recent capital and infrastructure investments, including a new 60,000-square-foot New London Community Recreation Center, sidewalk and roadwork investments, solar projects at the high school and a closed landfill, and planned park and pedestrian improvements in the State Pier Road neighborhood. The mayor said growth in housing—more than 800 units recently built and roughly 1,300 in the pipeline, by the administration's account—has strengthened the city's grand list even as it has shifted tax burdens among property classes.

The meeting concluded with a procedural motion to adjourn that passed by voice vote. The council members present voted to adjourn, and the meeting was closed at 6:41 p.m.

The mayor said he was required to provide the council with a budget by April and that the administration will continue to lobby Hartford for additional pilot reimbursement; council consideration and formal votes on the budget were left to the regular legislative process.