Credit: City of New Haven data The City of New Haven ended last fiscal year with an $8.5 million budget deficit, driven primarily by transportation and staff cost overages at the Board of Education. Mayor Justin Elicker delivered that news during a press conference at City Hall on Thursday mo rning. The deficit marked an abrupt shift from surpluses city government has posted in recent years. “This past year was a tough year,” Elicker said, Standing alongside city Acting Budget Director Ron Gizzi, Elicker said that the city ended Fiscal Year 2025-26 (FY26) — which ran from July 1, 2025, through June 30, 2026 — with an $8.5 million budget deficit. That number includes a $1.1 million surplus on the city’s side and a $9.6 million deficit with the city’s public school district. Elicker said that the city will tap into its “rainy day fund” to close the gap. That rainy day fund has grown from a deficit of $10.6 million to a positive balance of $55.6 million over the past six years, Elicker said. It has “given us a buttress for rainy days like this one.” The rainy day fund will drop to $47.1 million thanks to last fiscal year’s deficit. Elicker said that the key drivers of last fiscal year’s budget deficit included school bus transportation costs, which saw an overage of $10.5 million; school district staff costs, which saw an overage of $3.5 million; city IT costs, which saw an overage of $2.7 million; city utility costs, which saw an overage of $1.6 million; and city health insurance and liability insurance costs, which saw respective overages of $3.6 million and $2.1 million. The mayor also said that the city saw “significant vacancy savings,” as well as a “small increase in tax revenue” above what was expected, and an additional money from the state that helped chip away at the deficits. “The good news is our fund balance is in a really good place,” Elicker said. He also noted “significant” revenue increases from the state and Yale, a growing local tax base, the city’s capping of its debt issuance every two years, and a “significant increase” of city payments into its pension funds as examples of municipal financial progress and responsibility. How has the city budget been affected — and how might it be affected going forward — by the spate of wrongful-conviction lawsuits against the city concerning police misconduct from the 1980s and 1990s? After all, just this week, the Board of Alders approved the city’s plan to borrow $27 million to help cover a portion of the $30.5 million the city has agreed to pay in two such cases. “From the debt side, it didn’t have an impact” on last fiscal year’s budget, Elicker noted, as the settlements in the Vernon Horn and Marquis Jackson cases have come during Fiscal Year 2026-27 (FY27), which began on July 1. That said, the city will likely see “insurance costs continue to rise” in addition to the costs associated with borrowing tens of millions of dollars and then paying back the principal with interest in the coming years. Elicker also pointed to the “very significant capital needs” for the city’s school buildings and the “significant challenge” of contributing so much into the city’s pension funds to try to catch up on previous administrations’ underfunding of those obligations. “It’s difficult for us to bear all of the burdens for many, many past decisions at once,” he said. But that is what the city now has to do. Update: On Thursday afternoon, New Haven Public Schools Supt. Madeline Negrón told the Independent in a comment, “As Mayor Elicker reported, the drivers of the deficit we experienced last year were staffing, special education tuition, and the costs of running regular and specialized transportation for our students. We worked hard to mitigate expenses where we could, and we were fortunate to be able to maximize the use of $30 million in revenues from outside the general fund for appropriate expenses within their scope of use, relieving pressure on the operating budget.” Negrón thanked the mayor, alders, and state legislators for helping identify funds to mitigate the deficit — including one-time funds for Hartford that provided “a significant boost to the current year’s budget.” She added, “Looking ahead, we have revised our budgets for transportation and overtime, and we are working to manage those expenses as effectively as we can. We also are refining our processes for budget projection with the expectation that we can identify problem areas earlier in the fiscal year. We will continue to identify ways we can improve the transparency of our budget and budget processes. We hope and expect to continue our partnership with members of our community who see the need for more sustainable funding for our schools in New Haven and throughout Connecticut.” Click here to read the city’s summary of the FY26 general fund close-out. Acting Budget Director Ron Gizzi: While the city projected a $14M deficit in June, tax collection rev and prescription rebates helped reduce deficit to $8.5M. Elicker says hi to 911 call center director Joe Vitale after Thursday’s presser. The post City Posts $8.5M Deficit appeared first on New Haven Independent. ...read more read less