Bridgeport resident David Walker, the former U.S. comptroller general, writes the time has come for the State of Connecticut to take control of the city’s finances that includes authority to make recommendations on restructuring pension and retiree health care obligations. Walker sounds the alarm bell on finances, patronage politics and conflicts of interest such as city employees serving on the City Council in a commentary that also appears in the Hartford Courant:
Stockton is one of California’s larger cities. Nearly a year ago, its city council voted to file for bankruptcy. This is the largest municipal bankruptcy filing in the nation’s history. Bridgeport, however, is in worse financial condition than Stockton when you consider off-balance-sheet obligations.
Bridgeport’s financial mess has been in the making for a much longer period of time, but there are strong parallels between the two cities. Housing prices in Stockton have declined dramatically from their peak in 2006. Bridgeport’s housing prices have also dropped significantly from their 2007 peak, although not as much as Stockton’s.
But Bridgeport is far worse off when you consider unfunded pension and retiree health obligations. Stockton made very generous pension and retiree health care promises that have proved to be unaffordable and unsustainable–about $830 million in unfunded promises for a city with a population of about 269,000. Bridgeport has about $1.2 billion in unfunded pension and retiree health care promises for a city with a population of about 146,000. Bridgeport’s financial burden per person is almost three times as bad as Stockton’s.
Both cities also made bad bets. Stockton had an ill-timed $125 million bond offering in 2007 to improve the funding of its employee pension plans. It was expecting returns to far exceed the borrowing costs. That has not been the case. Bridgeport had a much larger $350 million bond transaction in 2000 for its pension plans. The city’s investments then more than halved in value, to $161 million in 2009. Now both cities face long-term repayment obligations and larger pension contributions than they expected.
Bridgeport can, for now, still pay its debts and other obligations through additional tax increases. But property taxpayers are beginning to revolt, and it is only matter a time before it will be unable to do so.
I purchased my home in Bridgeport on the advice of friend and former congressman Chris Shays. I did not know that the city was ground zero for fiscal irresponsibility at the time, but I did know that it had real potential, and it still does.
One reason that Bridgeport can’t get its act together is its patronage politics. Unlike Stockton, Bridgeport has city employees on its city council, including the president, who is deputy director for the city’s labor relations. The Bridgeport city charter forbids city employees from holding elected council seats for an obvious reason: They have influence over their own salaries and benefits. This represents a clear conflict of interest and is a major barrier to achieving the structural changes necessary to restore fiscal sanity in Bridgeport. It also serves to reinforce the importance of passing House Bill 5724 this legislative session to prevent city employees from being on a city council when the city charter prohibits it.
This is not the first time Bridgeport has come to the financial precipice. In 1991, Bridgeport became the first major U.S. city to file for bankruptcy when Mayor Mary C. Moran secretly filed under Chapter 9 of the federal bankruptcy code. A federal judge denied the petition, and since 1993 Connecticut law has required that municipalities receive approval by the governor before filing for bankruptcy in federal court. Although municipalities are prevented from filing without approval, historically the state has established financial review boards to oversee fiscally distressed municipalities, and Bridgeport operated under a such a board from 1988 to 1995.
The time has come for the state of Connecticut to–this time–appoint a financial control (not review) board to assume charge of the city’s finances. The new board needs to have additional authority, including the ability to make recommendations on restructuring the city’s pension and retiree health care obligations.
All interested parties–including the state, elected city officials, unions, retirees, bondholders and other creditors, and taxpayers at the state and city level–should work together to make this happen sooner rather than later.
A properly designed and effectively implemented financial control board, combined with passage of House Bill 5724 and additional economic development, can help the city avoid bankruptcy and help it reach its potential.
If these actions do not take place, it’s only a matter of time before Bridgeport will once again have to file for federal bankruptcy protection–but this time, its petition would probably be accepted.
You purchased your home FROM Chris Shays. Somehow considering how you love to brag about your financial expertise I find it curious you didn’t know the city had financial problems. And the fact you published this dreck in a Hartford paper is also curious. Mr. Walker is part of a movement by wealthy conservatives to take away home rule from distressed cities with large minority populations. This attack on democracy by Mr. Walker and his ilk should be just as disturbing as Bpt’s financial problems
FYI, “dreck” as used in the post above is a Yiddishism that means shit. I just thought this could be a teaching moment. Is David Walker thinking he is running for Mayor? I did not get the memo. Mr. Walker, are you in fact hoping to make a run for the most coveted position in our magnificent city?
What is a “Yiddishism” for HEAD?
The Yiddish expression you’re looking for is “kafin kup.”
So der Schmekel is a “dreck kafin kup?”
No, just “kafin kup.” “Kup” is head. Like in German you’d say “scheiss kopf.”
BlackRockGuy: You clearly have no idea of the components of the demographic that supports Mr. Walker. If you did, you would not even have seen fit to post this dreck. I am in no way wealthy, I am a Democrat, and I do not live in Black Rock. Yet I am in full support of Mr. Walker’s initiative to help Bridgeport get back on the right track. There are many more like me. But of course you would know this fact if you had bothered to try to get out of your own way and come to a City meeting or two. I have never seen a constructive post from you on this blog, and truth be told, you are coming off more arrogant than you accuse Mr. Walker of being. What makes it worse for you is the fact all of your posts scream “I am a jealous, bitter, small-minded man.” You should be ashamed of your doltish rants on this blog. Run along now and don’t forget to apply your sun screen. We would not want the scalding desert sun to bake your brain any further.
Mustang Sally, if you know where I live why are you criticizing me for not coming to city meetings? Considering it would be very expensive for me at this time, is that an offer of air fare so I can? I would love to go home to Bpt for a visit.
What are your motivations for making these comments? I am a common Bridgeport taxpayer and find David Walker’s comments very informative. He has great credentials to support his points of view. What are your background and credentials?
Home rule is cities rule by their City Charter unless they break state law. Bridgeport City Charter says no city employees can be elected to city council–we are working to allow home rule. No one in the private sector was fully informed of or aware of unfunded obligations for many years because of CT government accounting practices–I certainly would never have bought two houses here had this debt been known by the general public.
BALONEY.
Really, really, BRG? David Walker has done more for Bridgeport in his short time here with his review and involvement of our city’s sorry state of financial affairs than many of the folks blabbing on and on about it on this blog for years (no offense, JML–still love ya). If you are so smart, what do you suggest we do to avoid this pending disaster? Where would you start? Of course, it is easier to simply bury your head in the desert sand and lob insults from thousands of miles away. Go away, BRG. You add nothing to this conversation and you are clearly never going to support anything other than the status quo, which will ultimately lead us all into financial ruin. At least David Walker and his merry group of “Citizens” are having a look at how to make things better and are being pro-active in doing so.
Go ahead, BRG, lob an insult. I can’t wait for it. Know that we are all sniggering behind your back. You realize your idiotic posts actually are strengthening the resolve of us taxpayers who remain here to actually get involved and do something to effect change, right?
BTW–how are the massage parlors in Tuscon?
Yo, you went to there, BIB! I was just thinking BRG would probably propose we re-open the massage parlors that have been shut down to supplement the tax base.
We’re much better off without that particular tax base being part of the fabric of our communities–which is what the One Bridgeport folks have argued all along. Getting rid of MPs and their ilk is just a start in steering the ship in the right direction. Better businesses will come in and flourish and that will add to the much-needed tax base. Also, now that the folks at CW4BB are on the task of looking closely at the way the city itself is governed, I am hopeful we’ll see better times ahead for our once-great city. Now, if we could only find someone to restore the Majestic like the Arcade. Wow. That would be an awesome draw to downtown.
Steve, as you know for someone to run for mayor they must interact with other sections of Bridgeport.
Mackey, I totally agree. You also need a platform, personality and a following. I do not know Mr. Walker other than having worked in two Presidential administrations. We listen and evaluate and then we decide.
Ron, I would be very surprised if Walker has any interaction with other sections … particularly the East Side and the East End.
BRG has deserted the City for a dryer climate but continues to attack people who have used their intelligence, skills and time towards work (and saved as well as spent some of their earnings). Perhaps like others coming from down county, native optimism kept them from believing all the negatives stated about Bridgeport. After all, the entirety of dire statement could not be true. Well they can be true when you start digging. And the attempts at keeping Charter info and meetings away from the public is surprising as well. Walker, like others, live and learn.
The subject of Bridgeport’s financial status being of interest in Hartford is another BRG mental limitation. In the last external audit for 2012, Blum Shapiro indicated $270 Million came into the City in that year from the State of CT. That is equivalent to the amount raised from local taxpayers in that year. Do you think people in other cities who pay State income taxes might care? Or those in the City of Bridgeport who pay City property taxes, and State Income Taxes and Federal Income taxes (over $50 Million from the Feds in that year too), do they care? You bet.
Steve, you do not have to be Mayor to oppose what is going on in Bridgeport. Mayor Finch is a weak guy, personally, in a strong mayoral form of government. He could have tackled the problems that are facing us. He recites them daily like a mantra. But he keeps on adding to their severity.
The City Council could have pushed back in recent years. BOB has pointed to $5 Million of savings in “ghost expenses” for two years including salaries and fringes. The Council heard the comments and did nothing for two years. The positions remained open. The money got spent in other ways. The “accountable” Mayor Finch has gotten away with fiscal mismanagement and failing to tell the people the truth. Where is the FINAL June 30 2012 Monthly Financial Report for last year??? It is needed to fill in the blanks as to where money really gets spent.
Steve, there are a number of people not interested in running for mayor who are making their voices heard. Take off your “rose-colored” glasses and ask for some answers to the hard questions. Those are the ones the City does not want to answer. At the moment, can you list for me what the last five years of authorizations by CC include as far as projects, amounts bonded, where the projects stand towards completion, etc.? School projects are a significant part of that total. Where are we? What can we look at to see we are being effective, efficient and informative? Time will tell.
JML, I agree with you. I took my rose-colored glasses off and wouldn’t you know, I still see the beauty in the world. Maybe because my garden is in full bloom and I have become intoxicated by the scent of lilacs. If my initial post seemed an insult to David Walker, it was not. I always listen and evaluate. My question was sincere.
It does seem like Mr. Walker is contemplating a run and if so he is doing right by showing up at meetings, making speeches and leaving when he is done. He is definitely engaged and we need articulate, intelligent and accomplished people to address the status quo. If he is a Democrat he has a chance. This is Bridgeport. Republicans never win an election, Democrats lose. Unlike yourself JML, it does appear to me Mr. Walker is promoting himself and my interpretation is he is running for Mayor. Well, good luck to him. I am listening and evaluating.
It may be a drier clime but it certainly lacks your hot air.
Bravo for David Walker. He makes great sense in his article. I am a common taxpayer and to hear someone say “he is trying to take home rule away from a distressed city” makes no sense. The bill he his fighting for supports home rule by enforcing the city charter voted on by the citizens of Bridgeport. How someone can attack him for this really makes you wonder what their motivation is.
I placed this Op-Ed in the Hartford Courant for two reasons. First, they asked me to write it during a meeting I had with the Courant’s Editorial Board earlier this week. For the record, I also met with the Connecticut Post’s Editorial Board earlier this week. Second, it deals with two needed state actions and Hartford is the capital city for our state. I hope this helps people understand my placement reasoning.
Mr. Walker stated the following: “Connecticut to take control of the city’s finances that includes authority to make recommendations on restructuring pension and retiree health care obligations.” Okay the state comes in and decides to give us a handout rather than what we earned and paid for while active. Now we end up where? We have no one to speak for us or our widows. While the pension debt is high the totals mentioned are if everyone needed to be paid in full at the same time. It’s funny the number of retirees in Plan A never drops yet of the 21 guys on my shift when I started only three are still alive. Most of the people in plan A pay a portion of their retirement towards their medical benefits. Using private health coverage for people eligible for Medicare the cost to the city would be $1,900,000 per year for 800 retirees. Not all but the vast majority of pension plan A people are over 65.
The financial control board is a good idea, such a board would save the city millions in unnecessary spending. This board would trim every department of unnecessary manpower and spending.
Andy,
I agree a state-appointed Financial Control Board should have the ability to look at the organization and operations of all of City Government to improve its economy, efficiency and effectiveness. However, as you know, City employees and retirees have not paid for their retiree health benefits and they are unfunded. I personally think the City can and should deliver on its pension promises while eliminating related abuses. At the same time, there is no question the retiree health plan needs to be subject to major reforms. I’m not advocating canceling the plan and not providing any assistance, but that could happen in a bankruptcy filing.
Mr. Walker, after 1991 retirees do pay a portion of their health care cost. I regret I can’t quote the exact percentages but they are available.
You are right, they could file for bankruptcy and as a creditor I will be in line to get what I earned. Bankruptcy is a scary word, many times overused.
The control board could take one look at the PD budget and find a savings for 48 patrolmen paid for by the feds but yet put in as a budget expense for the city.
People want to go after Pension plan A retirees because we have no representation and politicians feel they can screw with us with no repercussions. That’s bullshit and when necessary I will prove it.
You all are after plan A but I hear nothing on the new Plan B pension system for cops that allows them to retire with a minimum of 50% after 25 years, this 50% is based on their three best earning years and includes outside overtime (guarding a construction hole).
Andrew C Fardy, as you see there is smoke and mirrors being thrown out there to bring in a “bankruptcy filing.”
Ron,
Have you ever read the audited financial report of the City of Bridgeport? It notes three years ago the City had over $900 million in unfunded retiree health benefits! The new number would likely be higher. The related benefits are unfunded, uninsured, not protected by federal law. Those are facts, not opinion.
How is “likely” fact, Mr. Walker?
Andy,
How many times do I have to say we should be able to honor legitimate pension promises but we should eliminate related abuses (e.g, double dipping, pension padding)? I have not even referenced Pension Plan A. You know as well as I do the amount employees have contributed, if any, to retiree health care is an incredibly small fraction of the cost. If employees contributed, where’s the money? It’s not in a “trust fund.” The truth is, anyone who would negotiate contributions for retiree health care and not require that it be placed in trust did a lousy job for the workers/retirees. Don’t get me wrong, I want to avoid bankruptcy and I think we can. It would be better for retirees, the City and it would help taxpayers as well. At the same time, if we don’t make major reforms, we are headed there. That would not be in the interest of bondholders, retirees or the state; however, it would relieve taxpayers of irresponsible and unreasonable burdens. One thing is certain, the status quo is unacceptable and unsustainable.
Andy, as you know firefighters have always paid towards their benefits.
I think I’ll move to Stockton. Fluck B’port.
Mr. Walker, as I said in the past for years and years the firefighter union tried to get the city to take our 8% contribution and put it into a fund all to no avail. We even lost that in binding arbitration. The city wanted the approximately $40,000 per week from cops and firefighters in the general fund so they could do what they wanted with it.
I previously pointed out the health care for people on Plan A should be in the neighborhood of $1.9 million per year. The city can change carriers whenever they want without negotiations.
The council and the city spent 8 times that much in ghost positions we found in the past 2 years.
I do agree the city’s financial house needs to be put in order.
Andy,
I know you are a key part of the BOB group and I appreciate your efforts. I would like to get together with you to delve more into the facts regarding the firefighters plan. I am very concerned about what I have seen posted on this site. Can we get together to discuss this matter further? My office number is 203-382-1000. Thanks.
Andrew C Fardy, one of the problems I have with those who seek the health benefits of retirees is they do not know the facts involved such as how much and for how long firefighters have for those benefits. One would think before you shout fire or before “filing for bankruptcy” one would have all facts gathered before they make a decision about bankruptcy.
Ron,
What “facts” would you suggest we gather? Is the City ready to provide the existing paperwork, such as it is, to provide a true picture of where we stand today, and our trend in the near future? I have not had helpful results with requests, as you must be adept and very patient to perform the “Freedom of Information” dance. When the City Attorney’s office sends you their letter it can take six months as they ignore you and you then get a hearing from the State.
Ron, what strategy or tactics would you suggest? Andy and you know there is no one on the Pension A Board who represents your retiree interests. (You can go to the City Clerk’s office to see how often that group references the retirees. I have done so.)
As for other information, there is enough data present as well as that which remains hidden to determine that:
Trends in Net Grand List:
. economic development progress that promptly adds to City tax base;
. actuarial reports with realistic interest assumptions for investments;
. similar accounting for OPEB pay as you go retiree healthcare benefits;
. a look at trends for City fund balance for the past decade;
. ownership by the City or its departments for real property beyond immediate needs.
Is there anyone on the Council who is looking at these trends? They all have a cumulative effect on our status as a “non-bankrupt” City. Unfortunately when things deteriorate to certain levels, the “decision about bankruptcy” leaves the hands of the City.
(What happens when businesses become worried about the City’s ability to pay its bills? Providers don’t respond to RFPs or if they do they pad the quote to take care of the risk of delayed payments, or non-payment. How does that work in the world of “minority business employment” where stories are told of contractors who must pay the MBE business within 30 days but then are not paid by the City for several months? The small contractor becomes a banker to the City! Strange, isn’t it?) Time will tell.
Truth hurts. Keep posting, Mr. Walker. Culture of Corruption needs to stop.
More insight into the obvious. The culture of corruption in Bridgeport has been going on for more than 40 years and no one has the ability, backing or chutzpah to do anything.
This has been a relatively informative exchange among posters with the exception of BRG.
When I served on the city council, the budget and appropriations committee was led by a practicing attorney with an accounting degree and a bank officer with an MBA.
The state financial review board was in place, chaired by the president of People’s Bank, Dave Carson.
The city council actually had members who were not Democratic Party representatives.
All budgets are based on assumptions. The Financial Review Board insisted the city budget was based on projected revenues and expenses supported by fact, using generally accepted accounting practices.
Measures were taken to address both annual budgets (GAAP)and long-term concerns such as funding of pensions and retiree health care benefits. Retirees began contributing to health care in 1991 as Andy Fardy said.
At the same time, the recommendations of the Management Advisory Committee (MAC) were being implemented. This project addressed effectiveness and efficiency of city services, started with Mayor Bucci, continued with Mayor Moran and ended with Mayor Ganim.
Also ending with Mayor Ganim was the State Financial Review Board when the city balanced two consecutive budgets.
The under-funding of pension plans and the on-going cost of retiree health benefits is a problem recent and current administrations have chosen to ignore.
The budget approved last week by the city council is an example of the apparent lack of concern for dealing with the problems of Bridgeport. The State Financial Review Board would not have allowed that budget to be approved.
Dave Walker is correct in suggesting the need for a ‘financial control board,’ as it is clear the current city council lacks the skills and commitment needed to acknowledge there is a problem. The conflict of interest we see reflects the political system that is satisfied with presiding over the demise of a once-productive city.
Mr. Walker is right about the need for a financial review board in Bridgeport, but the real problem lies in the uneven playing field dictated by the Greenwich/Stamford (Gold Coast) power brokers who promote and finance ill-placed/lopsided development policy at the state and federal levels favoring overdeveloped Stamford, which has created an untenable transportation log jam in Fairfield County that is threatening the whole economy of New England.
In reality, it makes much more sense to create jobs in Bridgeport rather than forcing the Bridgeport workforce to commute, en masse, to Stamford as is now regional economic policy in Connecticut. Bridgewater and Charter Communications should have been promoted for a Bridgeport location (Steele Point) rather than in Stamford. We desperately need the tax base, we have the housing stock, land, infrastructure and workforce–and the people of Stamford really don’t want more traffic and development (especially on their water front). It makes eminent sense for these projects to be located in Bridgeport, but the Gold Coast power brokers know no limit to their greed and determination to maintain their tax base and lifestyle at Bridgeport’s expense. Bridgeport is too easy a mark (with its internal corruption and defenseless population that is an easy exploitation target) to turn down.
Rerouting development to Bridgeport would solve our regional transportation problems cheaply, while solving a long-term economic conundrum for the region.
Yes, Bridgeport needs a financial review board to get our house in order, but make no mistake, there is Gold Coast complicity in Bridgeport’s corruption and failure to thrive that, of necessity, also involves federal and state complicity. In order for this in-tandem problem to be addressed, we need the oversight of trusted, impartial statesmen, of the ilk and level of Jimmy Carter, et al., to set up a review board that would monitor federal, state, and local shenanigans involving Bridgeport development and Bridgeport finances. Bridgeport’s problems go way beyond the local, and could even have international political machinations involved in our seemingly intransigent dilemma. (Sorry Mayor Finch and Governor Mallo, more power plants and even 100 Bass Pro Shops and some downtown housing aren’t going to help Bridgeport, long term. A paltry $1,000,000 for us for these projects and $11,000,000 for Steel Point doesn’t nick the surface of what we need–not like the $200,000,000+ in funding for Bridgewater and Charter Communications that Malloy is giving his home town in “First-Five money” for $1 billion in new development.
Mr. Walker: Please take a look at the big picture when proposing a close examination of where Bridgeport’s money is coming from and how it is spent. It is about the corruption, but not so much at the local level as at the truly high levels of power and influence from whence Bridgeport is exploited and hamstrung. (E.g., Shelton is more corrupt than Bridgeport, but yet they thrive. Stamford was much more corrupt than Bridgeport during their major growth spurt, but yet they went on to thrive.)
Bridgeporters need to be mad as hell and not take it anymore!
Jeff,
You can rest assured if the State appoints a Financial Control Board and I am involved in it, I will do my best to make sure it looks at the “big picture.” There is no question the City needs more cooperation and help from the state and federal government. However, Bridgeport needs to solve certain problems that are of its own making. Its governance structure, conflicts of interest, poor leadership, lack of transparency/accountability, high taxes, failure to deal with its structural financial challenges, and over regulation are of its own making and they need to be addressed locally. Passing HR 5727 and getting a state Financial Control Board put in place would be a great start. Electing some new City Council members in November and a new Mayor in 2015 would also be a big plus. The bottom line is we have to make Bridgeport attractive again and that won’t happen with the same people doing the same things in the same ways. It’s time for positive changes.
Wouldn’t a Financial Control Board make a great launching pad? Witness the political birth of Dave Walker, municipal reformer. Here’s the best part: it happened in Bridgeport.
Local Eyes,
Thanks for your comment, I think. Let me be clear, I am a professional and not a politician. I have no plans to run for office and would strongly prefer never to do so. I have been recruited to run several times in the past by both major political parties as well as a national independent initiative for various federal offices but declined to do so. Importantly, in order to be successful, any Financial Control Board needs to be comprised primarily of independent professionals. For example, Alice Rivlin, former Vice Chairman of the Federal Reserve, former Director of OMB and CBO, is a good friend of mine and she was co-chair of the DC Financial Control Board. David Carson, former Chairman and CEO of Peoples Bank who used to own my home and who was on the last Bridgeport Financial Review Board, are two excellent examples of positive past appointments. The politicians and political machine in Bridgeport are the primary reasons why we are in our current position. They aren’t solving the problem so we need people who will. I do agree if we could make this happen in Bridgeport, it would spark a major renaissance for the city.
Local Eyes, Bridgeport had a Financial REVIEW Board and they did a good job. The main problem was they weren’t here long enough. No local city should ever have to give up control of their financial responsibility to their state without a time frame and that time frame cannot be forever. We need a REVIEW board first to make the suggestions after finding the facts before any CONTROL can take place.
Ron–
Dave Walker is a man of action. He’s an agent of change. The review is over. It had little consequence. Control involves lasting change.
Bridgeport doesn’t need a dictator. It has had enough of strong-arm rule such as now exists. Democracy is messy sometimes but I can’t think of a better system. Change in the structure of the city govt would lead to better financial management. A plus would be non-partisan elections to the city council or some sort of proportional representation that would insure there would minority party or unaffiliated members of the city council along with re-establishing the Bd of Finance as a check. Another possibility would be going to a weak mayor form of govt with a City Manager to assure professional management.
Local Eyes, if the review is over then would you please post it on OIB? So you are telling us this review has looked into all of the union contracts and manpower levels. Did they look into city department heads and their salary and benefits? Did this review make decisions and was he on this review you said has taken place, please share this information with us all.
You sound like Machiavelli’s misinformed cousin. The review I was referring to was over in 1991.
There are a couple of facts that seem to be missing from this interesting discussion. First, under existing law no city can file for bankruptcy without the consent of the state. The chances of that happening are probably about as good as my chances of being elected governor. Second, the state has never created a financial review board without the agreement of the city or town involved. Indeed, in light of the home rule provisions of the state constitution it is doubtful they ever could.
They are not talking about a financial review board, Phil. They are talking about a control board which if it is what I think it is, would be something like what Michigan Gov Rick Snyder has done in Michigan, which is strip local elected officials of any real authority.
BlackRockGuy, great point, Michigan is the shining star that will be pushed nation wide in taking total control of urban cities that are on hard times.
Same legal issues regardless of what you call it.
Phil Smith, thank you once again for the clarity that is needed on this issue. I strongly feel Bridgeport needs the State Financial Review Board to come into Bridgeport but I have also posted this mayor and city council will NOT ask for that type of help. There is too much loose talk about bankruptcy as you know.
Phil Smith, what is name of the master plan for Bridgeport that was the working plan for Bridgeport to solve some of their main financial issues and what is the name of the person who performed that task when the financial review board was here before?
Ron,
The City was required to develop what amounted to a financial recovery plan, which was updated annually and reviewed and approved by the Review Board. That process served several purposes including serving as a framework for the city’s annual budget. It also forced the City and the FRB to focus on other issues like the future impact of spending decisions and the ways both revenues and spending were impacted by factors that were largely beyond the city’s control.
The plan was developed by the city’s Office of Policy and Management under the leadership of the late Steve Sasala. I think it’s fair to say he (and the Mayor he worked for) approached that task far differently than anyone in the current administration.
Here is a little history about Bridgeport’s attempt to file for bankruptcy.
On June 6, 1991, Bridgeport filed for protection under chapter 9 of the Bankruptcy Code. At the time of filing, and for several years prior, Bridgeport was experiencing financial distress. As a result, the city was providing suboptimal public safety, sanitation, health, and general welfare services. Shortly after Bridgeport filed for bankruptcy protection, the State of Connecticut (and a related, state-created agency) objected to the petition and argued, among other things, that Bridgeport was not insolvent at the time of filing.
In its decision, the United States Bankruptcy Court for the District of Connecticut began its analysis of whether Bridgeport was insolvent with a determination that on the petition date, Bridgeport was paying its debts as they became due. Consequently, the bankruptcy court focused on whether, as of the petition date, Bridgeport satisfied the other prong for insolvency under section 101(32)(C).
The first issue the bankruptcy court considered was whether section 101(32)(C)(ii) requires a retrospective or prospective analysis. Connecticut argued that sections 101(32)(C)(i) and 101(32)(C)(ii) each refer to a municipality’s current unwillingness or inability to pay its debtors. The bankruptcy court disagreed. According to the bankruptcy court, Connecticut’s position was untenable because its reading would make section 101(32)(C)(ii) extraneous and a subcategory of section 101(32)(C)(i). The bankruptcy court also considered a prospective analysis to be consistent with the purpose of chapter 9, which is to enable an economically distressed city to continue to provide necessary services while it develops a plan to adjust its liabilities. Thus, the bankruptcy court established that section 101(32)(C)(ii) hinged on a prospective analysis.
The bankruptcy court next addressed whether such a prospective analysis required a cash flow or budget analysis. On this issue, the bankruptcy court agreed with Connecticut, concluding that an insolvency determination under section 101(32)(C)(ii) requires a cash flow analysis and does not turn on whether a municipality will have a budget gap in the current year. Based on Bridgeport’s own evidence, the bankruptcy court determined Bridgeport would have sufficient cash (approximately $12.5 million) to meet its obligations during the current fiscal year.
The court declined to consider Bridgeport’s argument the city would run out of cash the following fiscal year (1992-1993) as too speculative. Because neither the Bankruptcy Code nor its legislative history indicate how far into the future a court must look to determine insolvency under section 101(32)(C)(ii), the bankruptcy court looked to the former Bankruptcy Act for guidance. Section 130 of the Bankruptcy Act required a Chapter X debtor to demonstrate its inability to pay debts in the future was not speculative, but rather, was imminent and certain. The bankruptcy court also observed the interpretation of section 101(32)(C)(ii) should account for the practical effects of such interpretation. Extending cash flow projections, explained the bankruptcy court, yields “less informed” conclusions. The bankruptcy court expressly determined that any assertion at the outset of Bridgeport’s case that the city would be unable to pay its debts in the following fiscal year would be unreliable. Accordingly, the bankruptcy court concluded that, to be insolvent, “a city must prove that it will be unable to pay its debts as they become due in its current fiscal year or, based on an adopted budget, in its next fiscal year.” Despite Bridgeport’s “deep financial trouble,” the bankruptcy court ruled the city was not insolvent and dismissed Bridgeport’s chapter 9 petition.
Ron,
Thanks for the helpful historical information. As you note, federal bankruptcy court does consider certain prospective information. In addition, there is a limit as to how much you can raise taxes before you pass a tipping point. Bridgeport is in that situation. If we had any real leadership in local government and didn’t have the many conflicts of interest that exist on the City Council, we would be in much better shape. It’s time to address these factors if we want to create a better future in the City.
Like it or not and I don’t blame the Sateen Jacket For Lunch Bunch for their indignation, but all of this ‘financial restructuring’ banter is focused on one thing and one thing only; the dissolution of labor contracts which were ill-conceived and have a devastating impact on the long-term financial stability of the community. It is abundantly clear neither side in the negotiations gave so much as a scintilla of thought as to whether or not the final agreement could be paid and where the money would come from. Those of you who made those agreements have absolutely nothing to be proud of. I predict the contracts will be dissolved. It’s simple arithmetic. They cannot be sustained. It’s also curious to consider a vast majority of retired Bridgeport municipal employees don’t live in Bridgeport. Taxes are too high because of the impact their pensions have on the community budget.
In negotiation between the City and firefighters here in Bridgeport the main issue is what is the City’s ability to pay for what the union is seeking. That means the union asks to see the financial reports and books of the City to see if the City can pay what the union is asking. The City does as major league football, baseball and basketball does, they all refuse to show their financial reports. So now how does a union go forward? Mayor Finch said the City was broke the last time they were in negotiation and the unions made concessions and what does this mayor do after the unions givebacks, he gives his staff large pay raises and he hires more out of those who don’t live in Bridgeport.
There is a great difference between Bridgeport firefighters (and police). Bridgeport firefighters unlike all other City unions firefighters cannot withhold their labor from the City, in other words, firefighters cannot ever go on strike. So now I ask, why should the City negotiate in “good faith” when there is nothing the firefighters can do?
Take this personally if you wish. I mean no consternation to you or any of the other participants in the negotiations. Nonetheless, neither side seated negotiators who knew what the hell they were doing. The simple fact of the matter is the impact of the contract on long-term financial stability was never considered. The result is ruinous and must be restructured to stave off assured collapse. I understand the union’s indignation. My wife’s teacher’s union medical benefits have already been restructured far away from the ‘promises’ that were made at the bargaining table. Those promises proved to be unsustainable as are the Bridgeport ‘promises’. Now she pays for things she otherwise would have not had to. Lots of shouting and screaming on both sides. The end result, however painful, ensures quite reasonable medical coverage. It just now comes at a cost.
yahooy, allow me to list items NO other City employee has to deal with but Bridgeport firefighters do.
Health Risks To Fire Fighters. Fire fighters face serious risks on the job. They face heat, flames, physical and mental stress, and high levels of carbon monoxide (CO) and other toxic risks in the areas around fires.
Fire fighters face a high risk for many diseases.
Heart Disease. Heart attacks account for 45% of all work-related deaths among fire fighters. This risk is high during fire fighting itself.
Cancer. Fire fighters can come into contact with dangerous, cancer-causing materials when they fight a fire, and the cancer-causing chemicals. Fire fighters are at increased risk of getting cancers of the colon, brain, bladder, kidney, and Hodgkin’s
lymphoma.
Chronic Respiratory Disease. The worst impacts of lung illness can strike experienced fire fighters. Fire fighters are exposed to numerous respiratory risks that can cause permanent lung damage.
Hepatitis B and C. Fire fighters are often the first emergency workers to arrive at a fire or a medical emergency. They can then come into contact with blood that may be contaminated with the hepatitis B and C viruses.
Fire fighting causes stress. So as many talk about changing or reducing or taking firefighters’ health benefits, think about these facts.
I appreciate those municipal workers such as firemen and cops who work daily under perilous conditions. We all do. Work-related illnesses and injuries such as those you delineate should be taken care of and they are by the worker’s compensation laws.
yahooy, work-related illnesses are not covered but injuries are. Those such as you delineate should be taken care of and they are by the worker’s compensation laws will cover Heart Disease but the hard part of all of this when did the illnesses occur and at what emergency call did it happen, those types of things are hard to document and many times the effects do not show up until years later.
Ron, here are a few things about pension plan A and what the city is not providing.
1. They claim there are approximately 834 people in plan A.
2. They don’t tell us how many are widows. Why is that important? Because widows only receive half the pension their husbands receive.
3. They claim the medical costs are crippling the city. What is the amount they pay for each person? Most of Plan A is on Medicare. Note: A good private plan medicare advantage costs about $2,400 per year per COUPLE.
4. Without accurate records we can’t tell the actual cost of plan A medical benefits. Many retirees pay a portion of their medical, how much I don’t know.
5. I wonder if this administration is lumping the cost of retiree medical benefits with the active firefighter costs.
6. Most people don’t know the city can negotiate with any health carrier and seek a better rate. Retirees have no input in this process.
*** THERE’S “NO” DOUBT A STATE FINANCIAL REVIEW BOARD IS IN DIRE NEED IN THE CITY OF BPT! *** IT WOULD BE IN THE CITY AND STATE’S BEST INTEREST OVERALL. ***