Gov. Ned Lamont signed off on a plan this week that will allow the state to increase its control over West Haven’s finances amid an ongoing scandal in the city.
That approval will give the state’s Municipal Accountability Review Board more power to set West Haven’s budgets, direct its purchasing department and adjust the labor agreements that the city enters with public employee unions.
The members of that state oversight board have had a hand in managing West Haven’s financial affairs for more than four years now, but by designating West Haven as a so-called Tier IV municipality, the board hopes it will finally have the ability to correct major flaws with the city’s financial controls.
West Haven city hall has been in a perpetual crisis for more than half a year.
During that time, federal prosecutors charged a pair of city employees and two other individuals with fraud for allegedly stealing more than $1.2 million from the city’s finance department. And last month, a forensic audit found that the city also misspent hundreds of thousands of dollars in federal pandemic relief funding.
Those disclosures convinced the MARB members that West Haven Mayor Nancy Rossi and the city’s other leaders were not capable of controlling the municipality’s finances on their own.
Lamont, who is up for reelection this year, agreed with that analysis.
“There is an obvious lack of fiscal controls in West Haven, and it is necessary for the state to step in and provide the oversight and accountability that the residents of the town and the state deserve,” said Lamont, a Democrat.
“This decision is a direct result of the fiscal mismanagement in the city that has gone on for too long,” he added. “Taxpayers deserve to have confidence that their money is well spent, and the stringent oversight that a Tier IV designation provides will allow the state to provide the tools necessary to address this situation.”
Despite the ongoing problems in city hall, Rossi and several other Democratic leaders in West Haven have spent the past couple of months protesting the MARB’s plans to ramp up its oversight.
During a meeting in March, West Haven City Council Chairman Peter Massaro argued against the state’s involvement and suggested the city was “going the right way.”
“Three years, we’ve been good,” Massaro said. “Why is the MARB still hanging us? … Why are they still playing with us?”
“I just don’t understand what they are doing to us,” he added.
Similar sentiments were shared by Rossi and several other city officials last month when the MARB held its vote to place West Haven into Tier IV status.
Mike Last, West Haven’s treasurer, told MARB members during the meeting that the city wasn’t being given enough opportunity to correct things on its own, and he complained about the bureaucracy that would come with additional state oversight.
A recording of that meeting also captured several West Haven officials discussing off camera how and when to file a lawsuit against the state to prevent MARB’s intervention.
Rossi, who was reelected for her third term as mayor last year, did not respond to questions this week about whether the city would seek a court injunction to try to prevent the MARB from further inserting itself into the city’s affairs.
The city issued a press release last week, however, in which Rossi pledged to cooperate with MARB’s directions.
“I will guarantee full cooperation from the City of West Haven as we move forward with MARB under Tier IV to continue to improve and strengthen the city’s financial operations,” she wrote.
Even so, Rossi continued to blame the city’s current circumstances on earlier administrations in West Haven and Michael DiMassa, the former state lawmaker and city employee who is at the center of the ongoing fraud investigation.
“If not for the unfortunate alleged illegal activities of this state representative, West Haven would be celebrating historic success,” she said.
‘On the same side’
During a meeting on Tuesday, one MARB member recognized Rossi’s recent pledge to cooperate with the state, and they thanked the mayor for dropping the adversarial relationship the city had previously developed with the oversight board.
“I’m grateful for the collaboration,” said Christine Shaw. “We are on the same side.”
Shaw, who represents the Connecticut Treasurer’s office on the MARB, said West Haven’s participation will be key to plotting a path forward and fixing the city’s finances so that it can operate independently again.
Before that can happen, the MARB made it clear that they will need to deal with a lot of lingering issues within the city.
West Haven’s leaders are still trying to increase the city’s staffing within the finance department. They need to reform the city’s purchasing rules, which allowed millions of dollars to be misallocated and allegedly stolen.
They have to create a new budget for the upcoming year. They need to figure out how to properly spend another $29 million in federal relief funds, which the city received through the American Rescue Plan Act.
Meanwhile, the city hasn’t completed an annual audit for the fiscal year that ended in June 2021. That problem was made even worse by the fact that the firm that was hired to complete that audit recently dropped the city as a client.
Jeffrey Beckham, the chairman of the MARB, announced Tuesday that the oversight board planned to use state funding to hire financial experts to help sort through all of those problems. But he didn’t want anyone to be under the illusion that it would be a quick fix.
“We are at the beginning of what I expect to be a lengthy process,” he said.