From Democratic mayoral candidate John Gomes:
John Gomes, Democratic candidate for Mayor stated today that the Mayor’s budget “has no real numbers, but is simply a house of straw built to deceive Bridgeport taxpayers. The lies about budget numbers grow bigger each year as the deficit grows bigger each year as well.
“Nowhere in this budget do we begin to address or even discuss the 600-pound elephant in the room which is the underfunded pension. There is no admission that this budget is already $30 million short because of pension contributions that have been deferred. And yet another deferral is requested this year.”
Gomes added, “It would be nice if each of the residents of this city could ignore their financial responsibilities and ignore the debts that they accrue. But we all know that this is not reality.
“How is it then that the Mayor can ignore the city’s pensions debt, and the fact that it continues to grow year after year. The Mayor is not facing the reality that the city must fund the pension of those who worked so hard for this city. That is truly a sacred obligation that should be held dear. I am concerned that if we do not address this problem in the near future, that the choices are either bankruptcy, a loss of pensions or a state takeover of the city’s finances. In this economy we cannot rely on the state or federal government to bail the city out. I do not want to see the State (again) have a financial review Board run Bridgeport’s finances as they have done with other municipalities in the past. I think we are better than that, and if we pull together we have the talent, the expertise and the intelligence to prevent us from going down that path.”
Until someone can come up with plan to put Bridgeport on the right track the State will again have to have a financial review board run Bridgeport’s finances because as Mr. Gomes has stated this Mayor has ignored the city’s pension debt among other issues.
My first “Dear John” letter. I entirely agree with most of your position statements pertaining to the administration of Bridgeport’s future. However I am not uncertain I am opposed to intervention of the oversight from the State to put BPT back on track. We are being strangled by our past and that impacts our future. At this point we need all the help we can get. Pray for BPT, vote for change.
I may be incorrect but I believe the State has to authorize the lack of funding to the City pensions. If I am correct, then what is the difference between which economic cretin runs the city? The one from Bridgeport or the one from Stamford?
Charlie,
Malloy will be pushed to spend time making sure B’port doesn’t embarrass him. Two things Dan doesn’t like … to be pushed or embarrassed. There will be hell to pay if that happens. He’ll throw Finch and Co. under the bus! Does he care about winning B’port? Sure! But he cares more about his legacy. Bring on the financial review!!!
If the City of Bridgeport re-elects Bill Finch, the Financial Review Board will be inevitable. Furthermore, state intervention of the Board of Education should occur as well. Your Windham County BOE is under state control. The irony? Windham has better educational metrics than Bridgeport. You, the people of Bridgeport, need state intervention unless the populace will go to the polls and remove the current people who have done so much harm.
Two popular challengers in Ms. Foster and Mr. Gomes will ensure a primary victory for the incumbent. Both will pull voters from each other. The result will allow the loyalists to put their man back in office.
Two big events happen to help Bridgeport and then Mayor Joe Ganim in the early 1990s and that was the State Financial Review Board and Governor Lowell. Those events put Bridgeport in the right direction with its union contracts and with Bridgeport’s budget.
With apologies to Stone Barrington and other interested posters or readers who are not Bridgeport residents and taxpayers, but Charlie has pointed out a fact of life relative to the pension problem: the City needs State legislation and oversight to continue “serious underfunding” of Pension Plan A obligations. And the State OPM and Treasurer provided that “approval” for 2009, 2010, and 2011 allowing the City to fund about $14 Million of contributions over a three-year period when their actuary, with an overstated assumption as to investment return for that period, showed a minimum actuarial assumption of $40 Million for that same period. This is a shortfall of at least $25 Million for that three-year period. But it was State approved, because the Mayor said things were tough in Bridgeport while appointing people to PR positions, raising executive salaries and funding vacant positions in the City budget.
It is all brinksmanship in any case because these funding targets follow Ganim and Fabrizi years where City funds of less than $1 Million were made yet multi millions were called for. We pay an advisor every year to calculate (with a number of chosen though not realistic assumptions) what we should pay, and we have ignored that advice. The Finch administration has trickled some funds to this obligation, but nothing like what is called for and Finch knows that.
So those who have looked at the numbers, like John Gomes, can see that “train wreck” looming closer and closer and that is not good for taxpayers who do not enjoy surprises. Now the City is scrambling once again to provide the State with its new “plan for Pension funding” as we read this. Millions of dollars short and months late according to State of CT communication that called for a plan to be presented in January 2011. The City answers in April but does not bother to talk to the Budget and Appropriations (or perhaps they do not bother to raise their enlightened minds at their public hearing when the consulting actuary appeared for the first time ever). So the public remains in the dark and the Mayor claims no tax increase required, shoving the necessary cost of Pension Plan A back in the drawer like it’s a nightmare for someone else to deal with. Will approval get stuck in an omnibus State legislation this year that gets voted on without State legislators knowing what is inside? (We understand by now that they do not read every bill.) I wonder if our State delegation has been informed about City plans and how they feel about this “planning in the dark” so that the Mayor can hypocritically assert “no tax increase?”
Last week I attempted to relate how a family might decide to fund college educations for their teenagers to the way a City might come to decisions about long-term needs and financing those needs. Perhaps we might get personal again: Let’s say you have a residence with a mortgage rate that is 7.4% currently. (That is the coupon rate on the Pension Obligation Bond that the City floated for $350 Million in 2000 and for which we pay $30 Million per year to bondholders annually as a line item in the Fire and Police budgets termed Pension- Principal and Interest.)
It seems a high rate today. Would you attempt to refinance your mortgage? And expect to get a lower rate, meaning that your total payments would be less over the life of the debt? (By 2029 at the current rate Bridgeport will pay $906 Million back on the $350 Million Pension Obligation Bond itself, in addition to funding the Plan to keep the retirees paid at $32 Million per year as far as the eye can see.) What is stopping the City from refunding the Bond? Has anyone asked? Is there a simple answer?
This is what happens when cans get kicked down the road, when obligations are made by legislators who have not made themselves aware of the costs of their plans, and when incumbents attempt to tap dance around an oncoming “train wreck.” Stay tuned …
B2,
Thank you. I was fairly sure but not positive. I am positive when there is no more money to pay or tax, every politician will be hiding under the “you can not sue me” rule. This was created to keep legislators from not being harassed by frivolous lawsuits although lack of gross financial diligence which will destroy many should not be covered but it will.
I don’t have to live in Bridgeport to be affected by the consequences of inept municipal fiscal policies.
As I recall the last state Financial Review Board had a study of Bridgeport’s management structure and issued a set of recommendations in the “Ukeles Report.” As so often happens, when the Board was dissolved the report joined the myriad other reports and architectural drawings and economic plans buried somewhere in city hall. I dare say a majority of that report is still valid. Perhaps our current crop of mayoral contenders should review it to help bolster their platforms.
flubadub, great point, the “Ukeles Report” is sitting there and it is still valid.
There were a number of changes that were made in the fire department that came from the “Ukeles Report,” they were unpopular but they were needed. As an example, the “Ukeles Report” suggest the fire department and the police department eliminate the positions of deputy chiefs, these seven positions are the highest paid positions excluding the chief in both departments. That is just one item that’s in the “Ukeles Report.”