Governor Dan Malloy has signed, see here, a state bill unanimously supported by the city’s eight-member legislative delegation that allows the city to bond unfunded pension liability expected to save an estimated $2.8 million in debt service payments annually. This piece of legislation is arguably the most significant for the city during the latest session of the General Assembly that ended in June, according to city finance officials and legislators.
Malloy’s signature gives the city statutory authority to pay off more than $83 million in unfunded pension liability into the Connecticut Municipal Employees Retirement System at a lower interest rate than the 8 percent set by the Connecticut Retirement Commission.
During testimony before a legislative committee, Mayor Joe Ganim said “We estimate that the interest rate on the taxable bonds we want to issue to pay off our unfunded pension liability will be in the 3.5% – 4.5% range–a major difference from the 8% we are currently paying on the unfunded liability … Our actuaries estimate the savings Bridgeport taxpayers will realize by taking this step will be approximately $2.8 Million dollars per year, for the next 26 years.”
The bill was supported by State Comptroller Kevin Lembo and State Treasurer Denise Nappier.
The measure has its critics including city resident David Walker, the former U.S. Comptroller General, arguing that borrowing to cover pension costs is poor public policy that has bitten the city in the past. Walker, a Republican, is exploring a run for governor in 2018.