John Marshall Lee, who organized a city watchdog group to sit through City Council budget meetings, files this essay on the heels of the non-partisan Institute for Truth in Accounting report /institute-for-truth-in-accounting-citys-billion-dollar-burden/ that questions the budget numbers of city bean counters. Lee addresses a central question: when is a budget balanced?
Bridgeport Budget-2011: Truths, Half-Truths and Outright Lies
Let’s start with a truth or two. The Institute for Truth in Accounting (ITA) routinely looks at Federal and State Finances and reports on them so that citizens can become aware of the reality of government finances. ITA looked at Bridgeport’s Comprehensive Annual Financial Report (CAFR) for 2010 prepared by our municipal auditors and issued in February 2011 as well as actuarial information contained therein to prepare their report.
Bridgeport by its Charter is mandated to prepare a balanced budget. That is true and verifiable. The reason for this requirement is to assure that all current costs are paid currently by taxpayers and not foisted on unknowing future generations. The ITA says: “A city budget is not balanced if current costs, including those for employees’ retirement benefits, are pushed into the future.”
Bridgeport reports total assets of $1.2 Billion, although more than $944 Million of these cannot be easily made liquid to settle city bills. But there are $1.6 Billion of current and future bills. In this regard a half-truth would be to state that you don’t have to pay all of those today (true) and then to act as if there are not ‘required and realistic’ ways to pay your current costs as well as some part of the future responsibility year by year over a 30-year period (false nondisclosure). With a home mortgage we call that gradual process amortization and the vehicle, a mortgage. What happens when you fail to pay your current mortgage monthly payment?
An outright lie would be to have a current expense, pay part of it or less, and find some way to hide the part that we are not paying today. When the City uses language in the CAFR footnotes, such as, “The City anticipates eliminating the fund deficits through future grants and revenues,” they need to be asked, “What revenues and when?” And if the only answer is, “Future taxes, after the election,” then they need to be accused of outright lies.
And this is what has happened for three years with Other Post Employment Benefits (OPEB) in Bridgeport. Retiree annual OPEB costs have averaged $51 Million per year for 2008, 2009, and 2010 for a total of $153 Million. The City has actually contributed $91,600,000 or slightly less than 60% on average. A shortfall of over $61 Million. So how do you hide a sum like $20 Million per year? You begin to use an “internal service fund” from year to year to cluster certain liabilities from your self-insured healthcare plan expenses for retirees. And if you do not have an adequate unrestricted City fund Balance, and nobody’s billionaire Uncle died making the City beneficiary of his estate, then you probably use “tax anticipation notes” to temporarily fund these increasing deficits.
Then Mayor Finch says the budget is balanced when it is not. And that is a lie on his part, assuming that he understands the financial legerdemain. And if he does not understand it, how can we expect the City Council members to get it? And since there is no special training or expertise required to sit on the Budget and Appropriations Committee, let’s assume they do not get it either. And we have no Finance Board to keep us honest! Only in Bridgeport!!!
The problem is simple. You have a bill due and payable this year. You need to pay that bill with revenue from this year. You are not allowed to put it on a “credit card.” When you proclaim a balanced budget with NO NEW TAXES due, the citizens cheer. When, as Mayor, you perform that three years in a row, you proclaim that you are the only Mayor able to perform this financial feat. But when your liability for OPEB increases from $800 Million at the end of 2007 to $861 Million at the end of 2010 three years later, the evidence of this untruth becomes available for all to understand. The Mayor is not telling the truth. He does not deserve credit for the flat taxing trend. He deserves to be fully and roundly criticized for dishonest statements and errant accounting.
Is there another Bridgeport elephant in the room being handled in similar fashion by the Mayor’s Office? The Mayor is asking the State of CT for permission to put Pension Plan A on a similar limited funding path (while it is underfunded by close to $140 Million). The public needs to call the leadership on this issue, too. Perhaps Tom Sherwood and Mayor Finch should be required to wear big NO TAX signs so that the public can understand who is failing in truth today, even the kids in school so that they can remember who caused them unnecessary pain in future years. In the meantime it is up to voters and observers to make sure the public understands the failure of truth-telling in 2011. Pushing current bills into the future is more expensive, is dishonest and deserves public resistance.
John Marshall Lee
Maybe Finch should recycle some old game shows. “To Tell the Truth!” and “What’s My Line?” could be a couple of the shows.
“I have a balanced budget!” To Tell The Truth!
“I take the Fifth!” What’s My Line?
I can see Jim Fox, with Kitty Carlisle, as a panelist asking the questions.
Jim Fox: So Mayor Finch, are those rain barrels big enough for someone to take a bath in?
When it becomes obvious the only future source of revenue is to increase the tax burden, the question must be asked how? The number of citizens in the city who pay revenue are diminishing. Business is not coming to the city and will probably be leaving the State. The ability to print money is not available. Massive layoffs? The options are becoming few and due soon.
Sell the Eastside back to Stratford & give them the airport. Let Black Rock become a separate town. Make McLevy Hall a museum of socialism and charge admission. The options become fewer and fewer. Nothing like ruling over a dying entity.
Finch has no clue. Timpanelli has ruined Bridgeport financially. Planning and Zoning constantly blocks substantial development while micromanaging variants. Economic Development is an oxymoron and the people running it are morons having no clue how to entice new business. Any business of substance has left Bridgeport leaving the residents to shoulder the burden of paying for the overbloated mayoral administrations and the flies and leeches who control the city.
My suggestion … either continue living in the past and suffer the responsibility of paying these weasels, or … get someone of substance to chase the moneylenders out of the temple!!!
Vigilante // Jun 1, 2011 at 8:02 am
To your posting
Vigilante,
We have to be ready on day one of a new administration to take the action required to deal with the true figure of a billion dollar budget deficit for the City of Bridgeport. There remain solutions, but there must be morally conscious number crunchers who will voluntarily dedicate themselves for the first few weeks to turn the budget inside out and upside down and reconfigure a City Budget that is of unquestionable transparency and accuracy.
Without dissecting the current City Budget dollar for dollar, we are nowhere near the right course of direction. We can get this mess straightened out with different people elected to City Leadership positions.
By the way, the money lenders total about 6 people who have done it all to ruin the financial health of Bridgeport. And they are not all elected … these are the appointed thieves …
Carolanne Curry–Unless my math is off a $1billion deficit is 1000 times larger than a $1million deficit, forget about the change. We had better get the state of CT in here asap. Gomes should demand the feds come in to end this corruption, also. That would get your boy a lot of followers.
Charlie, let’s think about options, something that was not done by Budget and Appropriations this year. There are doubtless many such options to reduce unnecessary expense in order to pay for commitments it seems to me, if we would begin to look for these options. For instance: the raises to non-union peeps, the vacant positions funded, the cars taken home, finding $89,000 for overrun in one City park, and people sitting in some City offices with nothing to do for good parts of the week? But we would not know about the last opportunity because the Mayor has castrated the CitiStat operation relative to discovering and acting upon City wide efficiencies.
If the Mayor wanted to pay for past City promises in Pension Plan A and OPEB, he would have funded those in his budget three years ago as a priority, perhaps $30 Million more per year. Then he could have told the City, “look what Ganim and Fabrizi did to you by taking their eyes off the ball. I am here to change that and put the City on a good course. We must get efficient.”
(But the Mayor believes a leader does not get much credit for honoring future pensions and healthcare costs. Consider our State Legislature or our Congress for example. Fiscal responsibility in elected officials is not necessarily respected or honored.)
But Finch did not follow that course. He held the “no tax increase” banner high and higher, and now has to defend the untruth of his pursuit. It is still not too late to come clean for the City, but another Mayor will have to get up to bat. At this moment Bill is on the high diving board with lots of campaign money. Perhaps he might donate that significant sum to the City as a downpayment on his fiscal incompetence? Perhaps next year, in his retirement from municipal office, he will write a book about his years in government funded by “Citizens for Excellence in Government”?
This is my favorite ditty.
There were four people–Everybody, Somebody, Anybody and Nobody.
There was an important job to be done and Everybody was asked to do it.
Everybody was sure Somebody would do it.
Anybody could have done it but Nobody did.
Somebody got angry about that because it was Everybody’s job.
Everybody thought Anybody could do it but Nobody realized Everybody would not do it.
It ended up Everybody blamed Somebody when actually Nobody asked Anybody.
What are your favorite ditties?
This is how I view this primary/election. The challengers are going through the motions and they are stumbling all over each other. Attacking the obvious things that are killing the taxpayers. Everybody knows the next Mayor whoever he/she may be will come face to face with all of these same financial problems. Somebody is going to drastically increase our taxes. Nobody wants to hear that. Does Anybody have a solution?
Antitesto // Jun 1, 2011 at 11:38 am
To your posting
Anti …
Of course any new mayor will be faced with the same financial problems … not news … what is the news is HOW the new administration would begin a revolutionary direction for dealing with expenses and revenues … honestly.
Before you cry about the taxes, think where else the savings can be made that would: 1. put a dent in the deficit, 2. begin reducing the deficit, 3. bring about a balanced budget in the true sense of the Charter.
If nobody in the current administration can find their way out of the trough, then call in the new leadership on September 13, 2011.
Carolanne (and AT, the limerick is at the end),
And perhaps the “truth” might make our City more appealing for development while prices are down and someone can show financial management has turned a corner without big surprises around the corner?
And what if Finch had raised the taxes 3% per year and done nothing else (and let’s assume that “done nothing else” is what he has done anyway), then we would be sitting with a tax burden that would accommodate the Pension and OPEB obligations … at least for starters and “pay as you go” are concerned. Was that so difficult Bill? Why wasn’t the truth considered? In my opinion it is because it would have directed money from taxes to retirees and therefore unavailable to provide jobs for political patrons. Make sense to you? Worry you? Not if you don’t have a NO SHOW or WHO ME job in the City of Bridgeport.
So a Mayor with a new broom can find the NO SHOW and WHO ME actors on the current payroll and give them as much due process as they can stand. That’s better than Finch has offered capable and credible workers in recent years. And it will save settlements and maybe move some folks who are already receiving a pension over to viewing daytime television and visiting their grandchildren.
There once was a Mayor in Nantucket,
He stored obligations in his bucket.
With tax revenues (but no Sherwood),
Paid even the pensions, and looked good!
His PR was great! No need to duck it!
Unfortunately too many Bridgeport minds are conditioned to rhyme this in a different manner. Different geography? Different Mayor?
There once was a mayor in B’port
Inadequate because it was short
He would screw the taxpayers
Fuck all the naysayers
And want you to come back for more
Carolanne,
“Before you cry about the taxes”? Are you implying John Gomes will pull a “Finch” and promise to balance the budget without raising our taxes? Regardless of the results of the primary & election I hope he bestows this strategy upon we the People. Democrat or Republican, the next mayor will need all the help he or she can get. Pay it forward.
“When is a City Budget balanced?” Have you been smoking crack? A city budget is balanced when there’s no debt.
Off the Post,
James Keyser, I want to hear from you. If you know James, ask him to come back & post. I see this horse race as a sure win for Finch. As in his race for the seat in the126th, a cavalry charge will divide the opposition in favor of the DTC candidate. I would like to know if he is considering a run as the Republican candidate. Although he wasn’t my own horse at the VFW debate, I was very impressed with this young man. Think about this, when Finch wins the primary what are our choices?