A national fiscal watchdog www.truthinaccounting.org/ in cooperation with Bridgeport resident David Walker, the nation’s former chief accountant, places the city’s financial burden at more than $1 billion. Anyone have a rich uncle? The non-partisan Institute for Truth and Accounting whose mission is “to compel government to produce financial reports that are understandable, reliable, transparent and correct” issued a gloomy report connecticut.statebudgetwatch.org/files/2011/05/Bridgeport-CT-2010.pdf following its review of the city audit and budget practices. “A city budget is not balanced if current costs, including those for employees’ retirement benefits, are pushed into the future,” asserts the organization’s chief executive.
The city has put off paying millions in pension obligations with the help of state legislation that has prevented an election-year tax increase. Meanwhile, city bean counters hope for a stock market turn around that will boost pension investments for future payments. David Walker, while serving as chief national auditor, screamed about Washington’s spending habits and warned of a financial meltdown, years before it occurred. See findings below:
TRUE BRIDGEPORT FINANCIAL BURDEN IS $1.4 BILLION
Institute Issues Bridgeport’s “Financial State of the City”
Chicago, (May 26, 2011) — Today the Institute for Truth in Accounting and the Comeback America Initiative released Bridgeport, Connecticut’s “Financial State of the City.” After an intensive review of the city’s 2010 audited financial report and actuarial reports, the Institute determined that, like many cities, Bridgeport is in a precarious financial position, because it is $1.4 billion short of the funds necessary to pay the city’s commitments as they come due. Each household’s* share of this financial burden equals $27,100.
The Charter of the City of Bridgeport mandates a balanced budget. “If Bridgeport’s past Mayor and City Council had truly balanced the city’s budget, no financial burden would exist,” said Sheila Weinberg, founder and CEO of the Institute for Truth in Accounting (IFTA). She continued, “A city budget is not balanced if current costs, including those for employees’ retirement benefits, are pushed into the future.”
While Bridgeport reported total assets of $1.2 billion, the Institute’s review of the city’s 2010 financial report revealed that more than $944 million of these assets cannot be easily converted to cash to pay city bills. These assets consist of capital assets, including infrastructure, buildings and land; and certain assets, the use of which is restricted by law or contract. As a result the city has only $229 million of assets available to pay $1.6 billion of current and future bills. Most notably, the City does not have the funds needed to pay for almost $1.4 billion of city’s obligations as they come due.
Many of the obligations relate to city employees’ pension and retirement healthcare benefits. Years of over-promising retirement benefits, while not setting aside sufficient assets to cover them, have resulted in the city’s retirement systems being underfunded by $1.1 billion. The retiree health care programs alone involve between $800-$900 million in unfunded obligations.
While the Institute for Truth in Accounting has issued a “Financial State of the State” for almost all fifty states, Bridgeport is the first “Financial State of the City” that has been released. This report was prepared at the request of the Hon. David M. Walker, Founder and CEO of the Comeback America Initiative (CAI) and former Comptroller General of the United States who is a Bridgeport, CT resident.
In response to this report, Mr. Walker said, “Like many states and municipalities, Bridgeport faces serious unfunded retirement obligations that need to be addressed. The time has come to bring the design and funding of these plans into the sunshine. Municipal workers deserve decent retirement plans but such plans should be comparable to those offered by other major employers. Efforts also need to be taken to prevent abuses of the system, including the disability provisions of these plans.”
The Bridgeport “Financial State of the City,” available at www.truthinaccounting.org and Connecticut.StateBudgetWatch.org provides this accounting by outlining the financial situation of the city, including unfunded liabilities to the city’s retirement systems. Additional information on Comeback America Initiative (CAI) can be found at www.tcaii.org
*The number of households is based on the estimated number of occupied units according to U.S. census data.
About the Institute for Truth in Accounting
The Institute for Truth in Accounting (IFTA) is dedicated to promoting honest, accurate, and transparent accounting at all levels of government and business. As a non-partisan, non-profit organization, the IFTA works to expose accounting deficiencies while promoting better, more accessible delivery of accurate government financial data—and, in turn, providing a foundation for more informed public policy. The IFTA provides its expertise to develop more effective accounting standards and deliver accurate government financial information to policymakers, opinion leaders, and citizens, so they can all work for a more secure financial future.
The Comeback America Initiative (CAI) is a Bridgeport, CT based non-profit organization that promotes fiscal responsibility and sustainability by engaging the public and assisting key policymakers on a non-partisan basis in order to achieve solutions to America’s fiscal imbalances. CAI’s goal is to foster a national discussion around the themes in the book “Comeback America,” with an emphasis on various specific policy, operational and political reforms to put government on a more prudent, sustainable and accountable fiscal path. The organization’s primary focus is federal fiscal issues; however, it will also highlight the larger national fiscal challenge and engage in certain reform initiatives in selected states (e.g., Connecticut) and cities (e.g., Bridgeport, CT).