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The Financial Trends Report examines
fifteen key economic and social indicators that denote trends in the local
economy during the five-year period from FY 1994-95 to FY 1998-99. The Financial
Trends Report is intended to inform our policy leaders and residents of the City’s
long term financial outlook. The report contributes to our ongoing commitment to
sound financial management by focusing attention on economic and social
indicators that have an impact on City’s financial state. The fifteen key
economic and social indicators refer to a local government’s ability to pay
for all of the costs necessary to maintain existing service levels, including
those costs that may be deferred such as infrastructure and maintenance costs.
The indicators also refer to the fiscal stability of a local government to
withstand economic changes and disruptions.
The Financial Trends Report considers Hartford's financial condition from the viewpoint of long-run solvency and service-level solvency. Long-run solvency refers to the ongoing ability of a local government to generate enough revenues to pay all the costs of doing business. Service level solvency refers to the ongoing ability of a local government to provide services at a level sufficient to ensure the health, safety, and welfare of those that live and work within its jurisdiction. Given Hartford's status as the state capital and a major center for business activity, combined with the age of its housing stock and the low per capita income of its residents, the demand for services of all kinds is high. Therefore, this is an especially important perspective from which to consider the City's financial outlook.
Local economic conditions have a significant impact on many of the economic indicators presented in the report. One key economic indicator is the growth in the City’s general fund revenue that depends primarily on the growth of the local economy. When the local economy is expanding, revenues increase and, conversely, when the growth in local economy slows, revenues contract. Although the City’s general fund revenues are predicated on the strength or weakness of the local economy, the financial condition of the State and Federal Governments have a profound influence as well. Intergovernmental revenues are the City’s single largest revenue category.
Economic and social indicators are presented individually along with a brief summary. No one indicator contained in the Financial Trends Report should be viewed as the single determinant of either the financial health or the potential weakness of the local economy. Each indicator provides us with a method to monitor the City’s economic and social condition. This report is not intended to provide definitive conclusions regarding the City’s long term financial outlook, but rather, to provide pertinent information about our community. The Financial Trends Report should be used as a tool to help formulate public policy for Hartford for years to come. The City’s overall budget outlook and the short and long term policies that guide it are provided as a further introduction to the Financial Trends Report and to the economic conditions that affect our municipality.
City of Hartford Adopted Budget Outlook
A General Fund Budget and appropriation ordinance totaling $422,666,780. This is approximately $2.4 million less than the 1999-00 adopted budget level. The $2.4 million decrease is attributed to reduction in the City’s pension contribution and other citywide expenditure adjustments. For the fourth year in a row, the adopted budget provides enhanced services while reducing our bottom line. The adopted budget presents a tax levy of 47 mills, which is adjusted for property revaluation and provides a balanced relationship between total estimated expenditures and estimated revenues.
A five-year Capital Improvement Program totaling $243,983,748 which includes $188,984,916 for the coming year.
A total direct appropriation for education purposes of $192,397,450, which increases the current funding level for the Hartford Public School System. This direct appropriation is combined with an indirect appropriation of $48,553,190 for insurance’s, benefits and debt service payments provide the Hartford Public School System with a city-wide expenditure plan of $240,950,640 or 56.5% of the City’s adopted, general fund budget. In addition, the Hartford Public School System will receive any net increase to the State of Connecticut’s Grant-In-Aid for education.
The adopted budget will be financed by $157,131,320 from property tax, $250,428,780 from other revenue including State aid and $15,106,680 from prior year cash surplus. Property taxes in the adopted budget represent 37% of General Fund Revenue. As in prior years, Intergovernmental Revenue from federal and State of Connecticut grants and Payments in Lieu of Taxes (PILOT) are expected to be the primary generators of General Fund Revenue at 53.6%. Other revenue sources and Fund Balance generate the remainder of General Fund Revenues at 9.4%.
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General Fund Budget Summary
The Adopted Budget for FY 2000-01 calls for a reduction in property taxes that continues the City’s commitment to preserve our tax base and to stabilize our neighborhoods. There are also major economic initiatives already underway in the City of Hartford that will help revitalize our downtown business district and neighborhoods and will shape our City for years to come. The Learning Corridor, Colt Building renovation, new Park Avenue theaters, relocation of Hartford State Technical College to downtown, and the new additions to the Bushnell Theater and the Hartford Public Library and its branches will all contribute to this revitalization while enhancing the quality of life for our residents. There are also other significant investments under consideration such as the Adriaen’s Landing/Convention Center, a Minor League Baseball Stadium, and the Civic Center and Renaissance Place development projects. These investments will also contribute to the economic expansion of both the city and the region.
The Hartford Parking Authority will finance, maintain, and operate the city’s dedicated parking facilities which will minimize the need for City resources to be re-directed for this purpose. The Economic Development Commission will continue to promote and develop the economic resources of the City to achieve a real economic expansion that will improve and preserve City neighborhoods. The commission has become the principal economic development agent of the City. The commission will also support major economic initiatives underway in the City.
The City of Hartford also continues its revitalization efforts through the work of Hartford 2000 and the Neighborhood Revitalization Zones (NRZ’s). Hartford 2000, which is comprised of city administration and representatives from the NRZ’s, was successful in obtaining nearly $20 million in State of Connecticut Urban Act funds. The funding is used to address a variety of revitalization issues including the elimination of blighted buildings, establishment of neighborhood retail stores, development of housing, and general improvement in the appearance of their neighborhoods.
The Comprehensive Communities Partnership’s (CCP) neighborhood and citywide problem solving efforts will be maintained. These efforts, when combined with the support of federal dollars, continues to provide staff funding and technical assistance to neighborhoods working on improving quality of life and preventing crime. In addition to providing community-organizing support, the Partnership will continue to identify citywide public safety and quality of life issues that can be ameliorated through our collaborative work with the State and Federal Criminal Justice System. Year two of our highly successful Community Court will focus on building partnerships with local service providers, such as Homeless Shelters, to more effectively case manage the human services provided to Community Court offenders.
Together, our neighborhood and downtown business initiatives, the Comprehensive Communities Partnership and Hartford 2000, give life to our commitment to Community Oriented Government. They provide us with proven processes through which we can work with our community as partners. The City’s commitment to preserving our tax base and stabilizing our neighborhoods is undiminished and will continue with the FY 2000-01 Adopted Budget.
Year 2000 compliance was one of the many vital tasks the City successfully completed in the current fiscal year. Now that our technology systems have achieved Y2K compliance, we are continuing to work diligently on enhancing these systems, where necessary, so that our systems will perform with the utmost efficiency. In this effort, the City and the Hartford Public School System will complete the full integration of our financial and human resource systems. This technological achievement will become a strategic asset to our City as we enhance our capacity to plan and manage our resources.
The City of Hartford’s Capital Improvement Program (CIP) is designed to implement many long range objectives of the Hartford Plan of Development adopted by the Commission on the City Plan in 1996.
The 2000-2005 Adopted Capital Improvement Program strives to balance and distribute limited resources to meet the City’s most critical needs over the next five years. The primary emphasis is to preserve the existing infrastructure. While the City of Hartford looks cautiously forward to new and creative development efforts to stimulate the City’s economy and tax base, it is important to maintain fiscal conservatism. This presents a challenge to City leaders who must seek to preserve and improve the existing physical plant so that operating departments may effectively deliver services. The 2000-2005 CIP was developed in consideration of both factors infrastructure preservation and prudent financial planning.
The 2000-2005 Adopted Capital Improvement Program is based on the requests of operating departments, the recommendation of the Capital Improvement Executive Committee and the review by the Commission on the City Plan.
The five year plan will be financed in the following way: City Funds: General Fund contribution of $880,000; $212,700,000 in Bond Sales, and $2,300,000 in Hartford Parks Trust Funds. State Funds: $7,165,748 in State grant funds and $4,871,000 in Local Capital Improvement Program (LOCIP) funds. Federal Funds: $16,067,000 in Intermodal Surface Transportation Efficiency Act (ISTEA)/Transportation Efficiency Act (TEA-21) funds. The five-year total is $243,983,748.
As we begin the new millennium, the City of Hartford is in a position to improve the delivery of vital services and achieve an economic revitalization of its downtown business district and neighborhoods.
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Current Year Collections Only |
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Property tax revenues are the second largest revenue source for the City. In fiscal 1996-97 property tax revenue accounted for 42.6 percent of total revenue. Intergovernmental revenues covered 46.8 percent. The City received more money from the State and Federal governments than it collected in local property taxes. This trend continued in fiscal 1998-99 with property tax revenue of 38.21 percent versus intergovernmental revenue of 49.33 percent.
The primary reasons for the decline in property tax revenues:
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Local Revenues include property tax, other
local taxes, licenses & permits, prior year surplus, charges for services,
fines forfeits and penalties, other revenues and reimbursements.
Intergovernmental revenues are State and Federal grants and
payments-in-lieu-of-taxes (PILOTs) from the State of Connecticut.
Intergovernmental Revenues are Hartford’s largest revenue category, ranging
from 46.5 percent of overall revenues in fiscal 1995-96 to 49.3 percent in
fiscal 1998-99. As a point of reference, intergovernmental revenues exceeded
property tax revenues in fiscal 1998-99 by $49.8 million. Intergovernmental
revenue increased by $10.1 million in fiscal 1998-99, primarily due to the
increase in payments in lieu of taxes of $6.4 million and the increase in the
Educational Cost Sharing (ECS) grant increased by $2.8 million. In addition, the
Educational Equity grant increased by $1.1 million.
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Measures the percentage of property taxes collected |
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The tax collection rate measures the percentage of property tax levied against property tax actually collected in a given year. One hundred percent minus the collection rate equals the uncollected property tax rate for the fiscal year.
It is expected that a percentage of property owners will be unable to pay their property taxes each year when they are due. Major credit rating firms assume it is normal for a municipality to experience a current-year delinquency rate of between 2 and 3 percent. However, if uncollected property taxes rise to between 5 and 8 percent, or if the rate of delinquency increases for two consecutive years, it is considered a negative trend.
Hartford’s rate of uncollected, property taxes decreased by .71 percent between fiscal 1997-98 and 1998-99. This continues a two-year trend of decreases in the delinquency rate. Moreover, the dollar amount of fiscal 1998-99 delinquencies decreased by $1.7 million.
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| Accumulated Tax Collections – By Year |
| Percentage collected as of June 30, 1999 |
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1 Year |
2 Years |
3 Years |
4 Years |
5 Years |
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1995 |
94.85 |
96.97 |
98.00 |
98.67 |
99.15 |
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1996 |
92.87 |
95.70 |
97.30 |
98.30 |
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1997 |
92.51 |
95.90 |
97.70 |
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1998 |
93.26 |
96.62 |
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1999 |
93.97 |
The Accumulated tax collection rate measures your tax collection of a specific fiscal year over subsequent years. A review of accumulated tax collections over time gives us a better understanding of ongoing collection efforts. For example, the collection rate on property taxes for fiscal 1994-95 was 94.85 percent, by fiscal 1998-99 the collection rate for taxes due in fiscal 1994-95 increased to 99.15 percent. The table on the facing page demonstrates the continuing efforts to collect delinquent taxes for prior years.
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By Property Category |
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Current year tax delinquencies include taxes that were due during the 1998-99 fiscal year but not paid. Property taxes due in the 1998-99 fiscal year are based on the 1997 grand list.
An analysis of delinquent accounts related to the 1997 grand list indicates that the breakdown of dollar delinquencies is 84 percent for real property, 2 percent for personal property, and 14 percent for motor vehicles. Current year tax delinquencies have decreased by $1.7 million or 14.6 percent under fiscal 1997-98. Overall current year tax delinquencies have dropped by $3,689,792, or 26.6 percent, since fiscal 1996-97.
In each subsequent year a portion of fiscal 1997-98 tax delinquencies will be collected. For example, 99.15 percent of fiscal 1994-95 taxes have been collected as of June 30th 1999.
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Ratio of actual revenues to budgeted amounts |
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The revenue collection margin measures a municipality’s
accuracy in estimating revenues that are set forth in the adopted budget and the
revenues actually collected during the fiscal year. Significant and continuous
discrepancies between these can be traced to a number of causes, including
inaccurate estimating techniques, inefficient collection procedures, an unstable
economy or unanticipated increases in revenue e.g. State budgets
intergovernmental aid increases passed after the municipal budget is adopted.
Hartford’s estimated and collected revenues have been
accurate in each of the five years covered in this report. Total actual revenues
were consistently greater than 100 percent of estimated revenues, ranging from a
low of 102.2 percent in fiscal 1995-96 to a high of 108 percent in fiscal
1997-98. The five-year average is 104.5 percent. In general, this record is
indicative of sound, conservative practices in estimating revenues and
efficiency in collecting them.
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General Fund Payroll & Fringe Benefits |
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Personnel costs include regular payroll, part time payroll and overtime expenses. Fringe benefits include employee health and life insurance, unemployment compensation benefits, employer contribution to Social Security and employee pensions.
Personnel costs accounted for 72.4 percent of total expenditures in fiscal 1994-95. However, personnel costs, as a percentage of total expenditures, has increased for each of the subsequent years and rose to 77.1 percent in fiscal 1998-99. Payroll expenses account for 81 percent of personnel costs and have risen 5.1 percent over the last five years.
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The review of operating expenditures per capita over time is intended to show changes in expenditures relative to changes in population. The State Public Health Department’s estimate of the City’s population, as of October 1998, is 131,036. This is a drop of 3,836 people or 2.8 percent since fiscal 1994-95.
Hartford differs from most cities in that as a major center for business activity, it not only serves a population that doubles in size during the daytime, but it also receives much of its revenue from the commercial and industrial sectors. Therefore, a consideration of the growth of its expenditures in relation to its population does not give a complete picture of the City's ability to pay for services.
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As a percentage of total payroll costs |
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Fringe benefits include both monetary and non-monetary forms of compensation provided to municipal employees, in addition to salary, in exchange for their services. Such benefits include vacation, sick, and holiday leave, health and life insurance, pension plans, and longevity pay. However, for the purpose of this indicator, only pension contributions made by the City and health and life insurance costs, mandated expenditures for unemployment benefits and contributions to Social Security are included. These are the costs computed annually in order to arrive at a total fringe benefit rate, which is expressed as a percentage of the total of all Board of Education, Hartford Public Library, and Municipal full-time payrolls.
Although the fringe benefit rate rose from 32.2 percent in fiscal 1992 to 36.5 percent in fiscal 1996, an increase of 4.3 percent, total expenditures declined in fiscal 1994-95 due to a significant drop in payroll expenditures of 4.2 percent. The fringe benefit rate declined by .61 percent in fiscal 1998-99 primarily due to a drop in the pension contribution rate.
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Health insurance costs examined include Blue Cross/Blue Shield, Health Maintenance Organizations, Accidental Death or Dismemberment and Group Life Insurance.
Health insurance costs increased by 8.5 percent in fiscal 1998-99. This was due to a 9.8 percent increase in Bluecross/Blue Shield claims during the year and a 5.4 percent increase in HMO costs. This is the second year in a row that insurance costs have increased. Continued increases in future years will create a negative trend in health and life insurance costs.
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As a percentage of Net Operating Expenditures |
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Fixed costs are mandatory expenses over which a municipality
has little control in the short run. These costs, which can be reduced only
minimally, if at all, during difficult financial times, include such items as
debt service, contributions to pension funds, employee benefits, lease-purchase
obligations and payments to other governmental agencies.
Over the past five years, this ratio has remained steady,
ranging from a low of 24.9 percent in fiscal 1996-97 to a high of 26.1 percent
in fiscal 1995-96. The increase to 25.1 percent in fiscal 1997-98 is primarily
due to a 3.96 percent increase in Debt Service and contributions to the Capital
Projects Fund.
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As a percentage of Net Operating Revenues |
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Debt service refers to the cost of borrowing money. The amount of principal and interest a municipality must pay each year on long term debt; such payments are considered a fixed cost, and the budget allocation cannot be altered.
he credit industry considers a debt-service ratio of 5 percent or less of operating revenues to be both sound and conservative, with the warning level at 20 percent of revenues. Hartford's debt-service ratio has been less than 5 percent in each of the last five years, remaining within the bounds of the 5 percent of revenue policy parameter. This indicates sound financial management by the City’s administrators and policy leaders.
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The Connecticut State Department of Education, Bureau of Evaluation and Student Assessment, Program Evaluation Unit, reports the above figures for public school enrollment within the Hartford School District.
Hartford's in-city school population decreased by 1,975 or 7.6 percent between 1995 and 1999. This trend may be an indication that the school population will continue to decline and could have budgetary ramifications in the funding of new schools or major renovations to existing schools.
The towns surrounding Hartford have experienced increased enrollments in recent years. For example, the Town of East Hartford enrolled 366 new students that transferred from Hartford schools during the first three months of the 1998-99 school year.
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As a percentage of Hartford’s Population |
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An increase in the number of poverty households or public assistance recipients can indicate an increase in the level and unit cost of a number of city services, because low-income households are generally in greater need of services such as subsidized housing, health care, employment assistance and day care. Even more costly for Connecticut's communities is the provision of direct financial aid and indirect payment of medical expenses for eligible recipients commonly referred to as General Assistance.
The mandated takeover of the General Assistance Program by the State of Connecticut on April 1, 1997 relieved Hartford of the costs associated with this program. Due to a series of changes in the General Assistance regulations pertaining to eligibility, able-bodied individuals are only eligible for temporary assistance. This has reduced the number of individuals eligible for assistance. For example, in fiscal 1995-96, durational limits allowed recipients to receive assistance for only 10 months in a 12-month period and in fiscal 1996-97, for 6 months during the next 12-month period. After the 24-month period, employable recipients are no longer eligible for financial assistance. The largest category of public assistance recipients is for medical (Title XIX) assistance only. This group accounts for 26,040 recipients or 53.5 percent.
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Hartford & State |
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For some time now Hartford's unemployment rate, as reported
by the State Department of Labor, like that of other large Connecticut cities,
has far exceeded the state average. The variance between the Hartford and State
unemployment rates went from 4.0 percent during fiscal 1995-96 to a high of 4.9
percent in fiscal 1996-97. The trend of ever increasing variances between
Hartford’s unemployment rate and the statewide rate ended in Fiscal 1997-98.
The gap decreased to 3.3 percent and continued to decline in fiscal 1998-99 to
3.0 percent.
There are several categories of persons without full-time
employment who are not counted by the State Labor Department: those who have
never been in the labor force; those who have exhausted their unemployment
benefits; those who worked part-time; and those who are categorized as
discouraged because they have stopped seeking employment. Based on these
factors, it is likely that the unemployment rate in Hartford is understated.
However, the drop in the Hartford unemployment rate over the last two years is a
positive trend.
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City of Hartford, Finance Department - Comprehensive Annual Financial Report,
Fiscal Years 1994-95 through 1998-99
City of Hartford, Finance Department - Tax Collector’s Annual Report, Fiscal Years 1994-95 through 1998-99
Connecticut Department of Education, Bureau of Evaluation and Student Assessment, Program Evaluation Unit, 566-5671
Connecticut Department of Labor, Research and Statistics Unit, 263-6255
Connecticut Department of Public Health, Policy Planning and Analysis Division, 566-1120
Connecticut Department of Social Services, Office of the Commissioner, 424-5512
Town of East Hartford, Board of Education, Central Registration Unit, 282-3644
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