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March 25, 2024

Hartford Mayor Arulampalam proposes first budget, which indicates declining tax revenue but no tax increase

HBJ PHOTO | STEVE LASCHEVER Hartford Mayor Arunan Arulampalam officially took office at the start of this year.

Hartford Mayor Arunan Arulampalam submitted a $623.83 million fiscal year 2025 budget proposal Monday, which increases spending slightly by $4.66 million, or 0.75%, and imposes no tax increase.

Arulampalam’s proposed budget predicts a $1.89 million, or four-tenths of 1%, drop in tax revenue for the fiscal year, with increases in state PILOT funds and other sources more than covering the gap.

The budget manages to expand city services by creating a new youth sports and recreation department, as well as a new division that will help small businesses navigate licensing and other City Hall processes.

Despite Hartford’s challenges, “we’ve balanced this budget while investing in key priorities and without increases in our taxes and fees on city services by a single cent, without cutting city services,” Arulampalam said Monday afternoon.

Arulampalam didn’t specifically indicate what drove the estimated loss in tax revenue, but the city’s office market, which is a major part of the tax base, is facing significant challenges from high vacancy rates.   

The owners of most of Hartford’s downtown Class A office buildings have filed court challenges to their property tax assessments, and two of the appeals recently went against the city, which will cost Hartford millions of dollars in tax revenue. It could also portend future headwinds.

In January, a New Britain Superior Court judge agreed to nearly cut in half the city’s assessed value of the 23-story “Stilts Building” office tower, at 20 Church St. Shelbourne Global Solutions, the property’s owner, estimates that will result in a refund of about $1.6 million in property taxes, as well as a roughly $750,000 reduction in yearly taxes.

Shelbourne alone, as of mid-March, had 20 additional pending court challenges against Hartford’s appraisals of various properties. This includes some of the largest downtown properties such as the 13-story glass office tower at 100 Pearl St., the 26-story “Gold Building” office tower at 755 Main St., and the 12-story “Metro Center” office building at 350 Church St.

In November, the city settled a lawsuit brought by the owners of the State House Square office complex, agreeing to refund $2.9 million in past tax payments and to lower future tax obligations.

Asked if the city has reserves to absorb any higher-than-expected tax revenue losses, Arulamapalam, on Monday, noted the city has a $59 million rainy day fund, which it hopes to increase by another $5 million using a portion of a $16 million budget surplus that is projected for fiscal year 2024, which ends June 30. 

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