Rolling The Dice On City Pensions

City fiscal watchdog John Marshall Lee (BEACON2 here on OIB) is probably smiling right now. For the past year he has researched, prodded, poked through city financial records issuing a number of essays about the city’s dubious pension future. Is anyone listening? Check out this column from CT Post scribe MariAn Gail Brown:

Listen. Pay close attention. Close your eyes and let your ears do their job. Follow these simple instructions and you’ll hear it: the sound of ticking.

This is not some biological clock. It’s the countdown to the day Bridgeport looks in its coffers and finds there’s no money to pay several hundred cops and firefighters their promised pensions. No moolah. The cupboard is bare. This day is coming for real in the very near future. This is no “Chicken Little” tale. It’s a ticking time bomb that nobody has the cojones to defuse.

The situation Bridgeport faces is that absent some spectacular market turnaround and robust hike in the city’s contribution to Pension Plan A, in a couple of years, probably less than a decade, as the vested cops and firefighters retire, the city won’t be able to pay them all they’re owed.

Bridgeport Mayor Bill Finch didn’t create this nightmare. He’s done some–but not nearly enough–to ease it. He’s certainly done much more than his predecessor, John Fabrizi. Still, some might argue Finch actually has made it worse by adopting a “Kick-the-Can” approach, foisting a mammoth monetary monsoon on taxpayers down the line. Yes, he inherited it from his predecessors who made certain decisions that in hindsight are dumb–such as underfunding pensions and making risky investments. Had the tech bubble not burst, however, this fund might be in a good position and Bridgeport’s former mayors hailed as financial geniuses.

The investment strategy of selling pension obligation bonds advanced by the Ganim administration a decade ago that Finch now criticizes was one he supported as a member of the Bridgeport City Council. This is known as a flip flop. And politicians do this a lot.

The mayor takes credit for “holding down taxes” and making “necessary tough decisions.”

Necessary tough decisions, eh? This is comical. Running to the General Assembly, not once, but twice to plea for a special dispensation so the city can pay way less than its rightful contribution toward its police and firefighter Pension A Plan does not constitute making a “necessary tough decision.” This fiscal year, the city will pay $7.2 million into a fund that it ought to contribute $20 million toward.

State law requires municipal pensions are funded at 75 percent. Bridgeport’s Pension A hovers at less than 50 percent.

In 2009, Finch convinced state lawmakers to exempt the city for two years from having to make any contributions to those pensions, a move that saved Bridgeport $4.5 million that fiscal year and about $32 million over the next two fiscal years. This year, the Legislature and the governor agreed to extend that exemption for a longer period, in return for certain minimum payments to the plan.

It doesn’t take an accountant to see while it may be true Finch has held the line on taxes, had the Legislature not granted the funding moratorium, taxpayers might have faced massive tax hikes. Asking a higher power to put off an obligation you are contractually required to make now on the assumption at some point in the future you might be better positioned to fund this pension only constitutes making a “necessary tough decision” if you believe, in some Orwellian or Radiohead way, that “2+2=5.”

Bridgeport would be better off with a mayor who faced hard choices head on, didn’t kick paying the piper off on future generations, didn’t try to fake out constituents, put his re-election aspirations on the front burner and relegated them to the back burner. How refreshing it might be to have a politician say, “I’ll serve only one term. I won’t play games to balance the budget. We’ll pay our bills as they come due.”

To be sure, Bridgeport is not the only town that’s put off tough decisions on pensions. For that matter, states have, too. So don’t write this off as just another “Bridgeport mess.” It affects a wider audience than just Bridgeporters. Lots of city cops and firefighters hired in the 1980s live in nearby towns. If the Park City can’t pay the growing crop of baby boomers who will retire in a few years, what will happen to these cops and firefighters ability to pay their mortgages and afford to live in your town?

Yeah, foreclosure is contagious.