It's About Economic Leadership

City of New Haven State of the City:
2004 Address by Mayor John DeStefano

Board of Aldermen Meeting, February 2, 2004 - Aldermanic Chambers

Mayor DeStefano makes a point on policy issues.

MAYOR DESTEFANO: Good evening Mr. President, Mr. City/Town Clerk. Let me thank the escorts for bringing me in. Good evening to all our residents of New Haven tonight.

To the Board of Aldermen, we spent the last three weekends together meeting and talking about what you would like to see happen in your wards. Tonight is an appropriate night to talk about the city as a whole and what we hope in the coming months of this year.

Coming to this speech, I recall a book this year by Doug Rae, former chief administrative officer, and chair of the Political Science department at Yale. If you've read, The City: Urbanism and Its End, it takes two snapshots of New Haven. Between 1910 and 1917 when Frank Rice was mayor, then it fast-forwards to 1954 through 1970, the heyday of urban renewal here when the City attempted to rebuild itself. And if you think back on that book, you've read it or going to read it, it talks about Frank Rice's New Haven back in the teens, which was pretty much the place that ran by itself. The manufacturing and population were exploding. The City reached its highest population in those 19teens years. And then it reflects on the fact that the City back in those days that we were the center. There weren't suburbs back in those days. The people who worked here also lived here, from the highest paid to the lowest paid. New Haven was it.

“Let's build a future based on where we came from and where we succeeded.”

Then to look fast forward to Dick Lee's New Haven, to 1954. The City was losing jobs. The City was losing population. Urban renewal began, and the great city center was rebuilt. Housing in the neighborhood was rebuilt, much of it was affordable, and boy, they spent money. We spent more per capita in New Haven than just about anyplace else in America. The results are around us. But think about it. The population still peaked in Mayor Rice's time. New Haven's urban renewal didn't stop that population loss. It only really enabled it as we did what? We built the highways for people to move out.

Think about the outcome. By 1970, we accomplished the emergence of neighborhoods of concentrated poverty led by public housing. And in the intervening years, filled in by Section 8 and RAP. When you compare us with one-third of our housing stock affordable compares to the region's average of 5%. We were doing it for everybody.

And that city of 1910-1917 when you think about it, it was based on manufacturing jobs. Urban renewal did nothing as you look at these numbers to halt the decline in those jobs. As those jobs left just as the great southern migration of African-Americans as they moved north into places like New Haven. You see, Rae makes a point in his book. Rae's point was that Lee's great effort to rebuild New Haven in the 1950s and '60s was impossible, because he was trying to rebuild a city that no longer existed. That city, Mayor Rice's city was gone. And what urban renewal was about in so many ways, was trying to rebuild something that just didn't exist anymore.

So I climb to tonight's speech, I was thinking about all the things that we wanted to do, all the things we need to do, and how we're going to go about doing it and are we going to be looking forward or looking backwards. Now, we're off to a good start and we know these numbers. We know what we've done.

The crime rate has held steady at less than half of what it was a dozen years ago. And records are spotty, but Lord knows I just couldn't find them, we couldn't find them. We couldn't find the year in which we had single digit homicides in the city like we had last year and the year before.

You know the story about the blighted buildings. From 1,500 to 1,000 to 500. You know from you own neighborhoods the new developments you see around the city. Strauss Adler, IKEA, Pfizer, Building 25 at Science Park, the Medical School, Eastern Circle, Monterey, all over the city you can see what's going on.

In Mayor Rice's day, New Haven's schools were the envy of our region. All the kids came to New Haven to go to high school. That's happening again today. Thirteen hundred kids from 23 suburban towns coming to New Haven each and every day to go to school. And the buildings like Fair Haven Middle School look better today than they did in Mayor Rice's time or in Mayor Lee's time. We've made good progress. And even as we acknowledge how much more we have to do, we shouldn't short drift all that we've done in the city over the last decade.

So thinking about the future, let's learn from the past. Let's build a future that's not based on what we remember, because the past is a funny thing. You never really can go back, and the problem was really never as good as most people seem to remember it to have been. Let's build a future based on where we came from and where we succeeded. And I can think about four things before I go through some specific suggestions.

First is responsible fiscal stewardship and coming to terms as we set our budget and set our advocacy about the changing nature of the City's revenue base. Second, let's look at how we do business and how others do business in New Haven, and how we need to work with institutions and organizations outside this building.

Third, we need to keep our engine working by understanding where jobs will be growing, how to grow them, and focusing on how to make them decent paying jobs.

Fourth, by creating wealth in our families, start with budget fiscal leadership.

You think about expenditures. The expenditure side of the budget is part of the solution, but it's not the underlying problem. Over the last decade, we working together have limited expenditure growth to less than 2% per year in the city budget, over a decade, less than 2% per year, well less than the consumer price index. See the real problem is the Grand List and our dependency on property taxes. Despite all of our work, despite the growing grant, despite the development we see around the city, all our taxable Grand List growth is being outpaced by tax-exempt growth: $11 million for the highway to expand through New Haven; Southern Connecticut University buying up significant parcels of property on Fitch Street; the State Legislature last year exempting transitional housing from taxation. All of these things worked against growing the taxable Grand List.

Think of what this means for us as we do the city budget. The city budget this year is about $361 million. Say we had a 3% growth in the city budget. That means we'd have to grow the budget by $12 million just the pay the same number of staff doing the same thing, none of the things we all would like to see them doing. We have to come up with $12 million.

Now that building (the Knights of Columbus) is 27 stories. It is 232,000 square feet. It is assessed at $10 million. It pays us $388,000 a year in taxes. To finance one year's worth of growth in the city's budget for property taxes, to finance that $12 million, we have to be building 28 of those every year. Now, we don't have the land to build 28 of those every year. We don't have the demand to build 28 of those every year. And that's a lovely building, but one is enough of them. We don't need 29 of them. That's the challenge we face in doing the budget. That scale of development just to fund one year.

There's initial fairness when you think about who pays tax in this state. If you look at the lowest incomes to the highest income from left to right on this chart, when you start looking at what percentages in their income those who pay taxes. Start with the income tax. It doesn't look so bad. Then add the property tax on top of it. And then add the sales tax on top of that. And then do the set off, because some of that is deductible on the federal income tax and some of it's not. And what you quickly find is an issue of fairness. The lowest point percentage of wage earners in Connecticut pays over 10% of their earned income in taxes. The top one-percent of wage earners pay less than half, 4.5% of their income in fairness.

But, there's still an even bigger problem that. We get 53% of our revenue here in New Haven from the State of Connecticut. It sounds like a good thing. Last year we had our first deficit in a decade. Why was that? Because a year ago when I came here, three weeks after I left this platform to speak to you, the State grabbed $6 million out of our city budget. Just took it out in order to solve their budget problem.

We cannot ignore these issues of fairness, of bad budget decisions by the State because it hampers what we need to accomplish. I suggest we need to do three things, and we need to work hard on them. Major non-profits need to pay payment in lieu of taxes. We need to work to make that happen. Second, statewide recommendations. The Blue Ribbon Commission on Property Tax Reform needs to be implemented, and you and I need to something to make that happen. We have to convince our own delegation to the General Assembly and the whole General Assembly, they're invested, and that they have the responsibility. If we fail to do that, if we fail to make these changes, whoever stands at this podium in the years ahead, whoever sits in your seats, are going to be going over the same old same old, year after year after year.

We need to do several things. It has to do with how we do business. Now this photo is about the second principal for the future, how we do business. At the end of the day this wasn't about bank demutualization. This was about our interconnectedness and our respect for one another and about refusing to be ignored. We need to do more of this as a city. We need to do more as a City of New Haven government. We need to get into other people's business, other towns' business, the State's business and businesses' business. We need to go to these places. These decisions that they make outside of this building, outside of the City Hall, they affect our families. They affect the future of our children. We have a right to go to these places. And I want to thank New Haven Savings Bank for coming to terms and understanding that, for understanding and helping us accomplish a demutualization where there's never been an accomplished in a demutualization anyplace else in place else in America. And it's time for changes in other places as well.

Reforms in the boards and directors of our area corporations and some of our non-profits. There are more than 18 people in New Haven that can sit on boards of directors. We can find them. I know we can. This is true. We can fight and curtail abuse of short-term benefits like stock options and windfalls. And it's time as we do this to rebuild corporate partnerships in New Haven based on openness not on shutting doors on one another. We do this as well.

And our own non-profits in this city. Our own non-profits in New Haven need some attention. Let's acknowledge their emerging roll in this city. Certainly, we see them on the tax-exempt Grand List. That's for sure. Corporate governance reform goes for them as well. They must bring professional expertise to eliminate conflicts of interest on their boards to prevent them from having the problems they have time and again. They need to pay their fair share when they can too as well.

What's good for corporations and what's good for the non-profits, is good for us politicians as well. Our business is getting a bad name. Names like Ganim Sylvester, Giordano, and now, the Governor. It's time for campaign finance reform. It we are not acting to restore confidence in government, if we elected officials are not acting to restore confidence, who will? Who will do this for us? If we don't do it, we are part of the problem. It's time to allow public financing of elections. And in New Haven, we need to lead the way with public financing of mayoral campaign in this city.

Changing the way we do business for corporations, non-profits, politicians, is looking forward. Doing nothing, letting the same old same old stand is looking backwards over our shoulder.

Now in Mayor Rice's time, he left it to the barons of business to create jobs, or they elected one of their own. That's where your sergeant came from, the sergeants.

In Mayor Lee's time, they rebuilt their factories for jobs that were moving out of the state. You know this photo of the Register's building? What was it built as? Do you remember? Sero Shirt Factory. Build the Sero Shirt Factory. Sero moved out two years after it closed. The Register moved in. We need to build for things that are going to be here in the future.

Now, you remember this slide. Manufacturing jobs. Well, this is a good story. Those jobs are being replaced at Yale, the other colleges and universities, the hospitals, the bio-tech companies. We need to support these jobs. We need to help these jobs grow. We can do that.

Programs that support regional jet service at Tweed Airport is critical to these jobs. I want to thank this board for coming to the table and doing their job in that regard. And I look forward to the business community. One point nine million dollars- let me say that again, $1.9 million to match what this city's done. Supporting the arts and the quality of life that the arts deliver. It critical to the jobs we're creating in this city. These are essential investments in what we're becoming and why people would want to locate business here.

Back in Mayor Rice's time too, unions took manufacturing jobs and they did something. Manufacturing was hard work, real hard work. Not only was it hard, for the unions it was lousy pay type of work. And what the unions did is they kept it. It was still hard work, but they made the work do well. They made it pay for people, their union struggles still to be fought. At Yale New Haven Hospital and Chef's Solution in North Haven where most of the workers came out of Fair Haven and wherever else the fight for fair pay takes us. Creating pay and jobs is essential to creating wealth in our families.

So much of urban renewal was about rebuilding space. Too little of it was about rebuilding families. Nothing creates wealth and families like education. Families that can take care of themselves add value to the children and to the communities of which they are a part.

Our job, Gateway Campus has got to be rebuilt. It's time to stop watching everybody else's community college get rebuilt. Gateway needs to get rebuilt, and we have to fight for the state university system. Tuition has gone up 50% over the last five years at Southern Connecticut State University. Let me assure you that more New Haven high school students go to Southern Connecticut State University and Gateway than go to Yale, not to take anything from any of them. But, too many dreams and too many choices are being deferred, delayed or remain impossible by these tuition increases. Now these are state choices, but we have to get into other people's business. We need to bring our message and our people to the State Capitol and anywhere else we need to get this done.

We need to make other investments to create wealth in families. We need fewer neighborhoods of last resort and more neighborhoods of opportunity. Last year, you hear us tell you this over the last few weeks, LCI became the second largest non-profit homebuilder in the city; we're going to be the first this year. The first legislation I will send you this year will be re-engineering LCI. It will take advantage of the resources made available under the New Haven Savings Bank Agreement. And we'll build home ownership units and we'll build affordable rentals in this city, and we'll build homeownership units that can mortgaged to pay for a college education or to start a business. As we put more and more vacant buildings back on the tax rolls, we're going to act to stop the spread of blight. The LCI legislation will require licensing of all non-owner occupants' rental buildings of two units or more. This will prevent blight, and in the Hill would have saved lives. In short, we'll continue to build neighborhoods of hope by looking forward and not backward.

In their time, Mayors Rice and Lee, worked hard. Their city doesn't exist anymore. It isn't there anymore. And now, it's our time. What do we need to do? We need to be responsible fiscal stewards. Non-profits need to share the cost as well as the benefit. We need to fight and lobby especially among our state legislators for tax reforms. And we need to continue to be responsible decision-makers on our own budget. We need to change how we and other people we work with do business: Independent our boards and directors; no corporate windfalls; non-profit accountability and a fair share public financing of campaigns.

We will shape the new economy. Tweed Airport and the Arts; support for union struggles to make work pay; and we need to create wealth for our families; at Gateway Community College, it's a state university system; by homeownership and by preserving our housing stock. That's a good agenda. That's an agenda we can do this year.

I want to leave you with a quote. One of my staff members gave me this, and I loved it. 'Some excellence can be attained if you care more than others think it wise, risk more than others think is safe, dream more than others think is practical, and expect more than others think is possible.'

Let's me a city that does that, that cares more, that risks more, that dreams more and that expects more. I want to thank you for all the hard work you do. You are a great team. I love working with most all the time. You do so much to make your neighborhoods better places. You truly amaze me in the effort and time that you put into your non-paying jobs. My congratulations to all of you. God bless you and God bless our city.