Today (Wednesday) is the last day of the legislative session in Hartford. What happens there has huge impact on what happens with the weary budget of Connecticut’s most populous city. The State Senate Tuesday night at the urging of State Senator Ed Gomes voted to allow the city to delay public safety pension payments to ease the city’s cash flow.
CT Post reporter Ken Dixon has more:
The state Senate, amid complaints from Republicans who warned that other cities might follow suit, voted late Tuesday to let Bridgeport delay payments to city police and fire pension funds to save about $7.5 million at a time when new Mayor Joe Ganim is tackling a $20-million deficit.
The 29-7 vote occurred after Sen. Edwin A. Gomes successfully attached an amendment to an unrelated bill, allowing a six-year restructuring of the pension-fund payments. “We need help and that’s why we’re asking for relief,” Gomes said, warning that if the city doesn’t get some breathing room, critical services may be cut and taxes may have to rise on “vulnerable populations.”
The vote was at least a partial victory for Mayor Joe Ganim, who is recent days made visits to the Capitol to convince Gov. Dannell P. Malloy and leading lawmakers to give their support.
Full story here.
State Senator Ed Gomes, thank you again. Now, when will Mayor Joe Ganim endorse State Senator Ed Gomes? That’s it Joe, keep playing games, just come out and do what Mario Testa is doing and tell us you’re backing Dennis Bradley against State Senator Ed Gomes.
With ongoing concern with underfunded government employee pension plans, to have reduced payments in early years, followed by years of increasing balloon payments is a real concern.
Will employee contributions remain level? Who crafted this legislation for the Democrats? Will Bridgeport be just the first city to request a restructured payment through legislation?
The City’s repeated failure to make pension payments when required is a major cause of the plans financial difficulties.
The pension payments are delayed but the pension payouts continue unchanged. Pensioners are protected by the rule of law but Connecticut cannot repeal the laws of economics, which favor state employees at the expense of taxpayers. Senator Gomes let the genie out of the bottle and working families statewide will pay the price, which has just gone higher thanks to this law.
Good job Ed, that’s why Bridgeport needs a seasoned veteran Senator. In these tough economic times Bridgeport doesn’t need a senator with a learning curve, instead they need a senator who knows his way around Hartford, knows what Bridgeport needs and how to get things done.
Joe Ganim, what are you waiting for in endorsing Ed Gomes for State Senator? Are you doing what’s right for the city or what’s right for Mario and the DTC?
President Donald Trump has said he will expand the benefits of those on Medicare and Medicaid, so the same way he plans on doing that could be one way for Connecticut to follow.
Ed Gomes is a warrior and deserves the support of everyone in Bridgeport and Stratford.
Because it was never “planned,” the pension plan has now become a pension problem, the Achilles Heel of municipal finance.
Future Bridgeport mayors will inherit a problem caused by today’s delay. It’s another form of debt that helps Ganim’s budget. Put another way, what’s good for today is bad for tomorrow. Kick the can.
The last contract with the Police Department put a burden on the City very few people got to see and fewer obviously understood the implications. Essentially police officers had a chance in the CT MERS plan to raise their retirement payout from 50% of their basic pay rate to a much higher income by including OVERTIME for credited pay on which the 50% multiplier was applied. If you are able to build overtime service in three of your years of service at 150% or 200% of base pay and that means only 12-15 hours extra per week, suddenly you might retire on a pension equal to your former base pay. Did anyone know the expense of that contract? Where was it shown to Council members as taxpayer representatives? Perhaps they should be thanked by police officers. Perhaps they ought to be questioned by taxpayers.
In any case, if the Police Department budget shows a budget around $105 Million, know that some $40 Million is going to Plan A, Plan B and MERS as well as repaying the Pension Obligation bond, a 30-year obligation of the City. Can’t change it? Well some cities have amended plans for new employees by providing Defined Contribution plans that shift the cost of mortality and investment risk to the worker and not the taxpayer. This is private industry today.
Perhaps overtime earned carrying a flag at a roadcut needs to be modified also. Does a fully trained public safety officer need to be used in such way long-term to put the City budget at dis-ease? Or can a newly formed corps of trained flag wavers with good health insurance and a Defined Contribution plan substitute with no less safety to the driving public and a great saving in cost? Who is handling our Labor Negotiations? Should we stop running to Hartford for help at the 11th hour, which is what Bill Finch did also? Has any of this been OPEN, ACCOUNTABLE, TRANSPARENT and HONEST governance in your opinion? Time will tell.
And Ed Gomes maintains his title of “Apple of the 23rd district’s Eye.”
How do you like them apples, Bradley? 😉
Rock Star move.
The pension issue will have to be addressed sooner or later. It’s a question of when and how. Good luck to all involved.
This is bad. BPT will have to make that payment sooner or later. The way these trusts or annuities work is the longer the money is in the account the more it grows. By waiting to make your deposit you lose the interest and/or dividends. By not making a deposit in ‘down’ times you will lose the gains you can make when things recover. It is that whole buy low, sell high idea. The ‘things will get better’ for BPT may be a flawed theory or having to make this payment in the future may derail/delay BPT’s recovery. I.e., there is no guarantee it will be easier to make the current and past payment in the future than just making the payment now and make the future payment in the future.
You have a lot to say so why are you so scared to use your real name your parents gave you?
Why? Knowing who I am does not add or detract from the relevance of my comments. That comment is just an opinion. If I could accurately predict the stock market I would not be doing this.
In general putting off paying bills is a bad idea. Putting off your car payment because it will be easier to make two payments next month is usually not true but you could hit the lottery. Hindsight is always 20/20.
So you have no respect for your mother and father in being a proud woman or man and being proud of who you are. No one should have any respect for someone’s opinions who is so scared to use their own name. You must be really scared.
I am an orphan who was raised by wolves but thank you for bringing up that very painful time in my life. Since you would not know me anyway, why does it matter?
BOE SPY may have a point and also Tom White. Typically putting off debt or payments into the future may be helpful now but it still needs to be paid. And sometimes this could make interest accrue etc. But these are pension payments so I am not really sure how this works in terms of interest etc. to others. I wish someone could give a very easy example using a simple $100 total in pension budget and what would happen if payments are delayed or continue as usual. Hope this makes sense. What would the two scenarios look like?
Andmar,
Great question. Hhopefully when the State Senate voted on this bill, someone from somewhere had crunched the numbers as to fiscal accountability. If this was not done, then the well-meaning blind or the “keep ’em in the dark” practitioners will have won for another day.
If the amounts we are putting into the plans after the exact calculations of actuaries (who may also be using too generous assumptions) are not placed in as projected, but rather deferred, they will not earn the returns necessary each year and that added amount will be required in the future.
Joe Ganim knows the routine. After all, the City was on a pay-as-you-go basis for public safety pensions at the time the concept of borrowing a lump sum (Pension Obligation Bond) and repaying the bond for 30 years while also making pension contributions. Oh well. We are forgetting once again expensive lessons. Look at the price tags for alternative scenarios? What a great idea. Will we continue to elect representatives who will not be guided by the numbers? Time will tell.
Yes, so it all sounds good for now, but we may accrue a cost by a delaying this. So my question is, 1) do we in fact accrue a new cost (let’s say through interest or something else)? and if so, 2) what is that amount as compared to if we did not delay the pensions? These are often the type of decisions that hurt us later. It’s basic finance, but since these are pensions and not necessarily debt (maybe I am wrong) then perhaps the financing of this differs, which is why I raise the question.
Andmar, so tell us what are your solutions? We could lay off police officers and bring in the National Guard and we can lay off firefighters and go to an all-volunteer fire department and there are your savings and no tax increase.
If the “price tags” for Police Department pension plans’ funding today exceed $40 Million, and if there is a present risk the Plan A assets may expire years before the Pension Obligation Bond payments do, and present a new “price tag of perhaps $15-17 Million annually to the Bridgeport taxpayer, and if we know “kicking the can down the road” will cost us more over the longer term, and also allow us to spend on items that are not necessarily a priority today, and yet we do not demand to see the labor contracts that are offered and the fiscal implications for years to come BEFORE the Contracts are signed …
WELL, as Walt Kelly, POGO author shared with us many years ago, “We have met the enemy and he is us!” Time will tell.
Lennie, can you post a link to the article where Finch did THE EXACT SAME THING to the fire department’s pension? It would be funny to see who railed against Finch but are supporting of Gomes.
BOE SPY,
What caused the City to offer and the unions to accept a transfer from Plan B to MERS? I don’t remember any particular notice or fighting highlighted at the time, and precious little information about what the change might imply going forward.
Both the Fire Plan B and the Police Plan B were rather well funded, at least in comparison to Plan A, which as a Plan is on respiratory therapy at the moment. If that Plan expires on Ganim’s watch we shall certainly see “weeping and gnashing of teeth” on the part of taxpayers, and Joe’s fiscal abilities will certainly be called out.
Without any further info, it would seem the one thing certain about MERS favorable to retirees was the incomes used to determine pension benefits could include OVERTIME. Who benefited? And when did OVERTIME become seriously used, far in excess of budget projections? Was it the past five years? Surprised? And were old overtimes as earned make contributions for pension purpose, or not? Who will tell all? Time will tell.
Being a long-term voice and vote for the working class and labor, I am sure this was not an easy decision for Ed and I am sure he balanced what was best for the employee versus the taxpayers in reaching acceptable terms.
Good job, Ed.
*** LET’S NOT JUST PUT IT TEMPORARILY ASIDE BUT FIND OTHER MEANS OF CONTINUED FUNDING NOW AND IN THE FUTURE! ***