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.
Losers talk about “saving money” while winners talk about creating value. This bill is about state employees becoming non-working, long term liabilities.
I’ve made bigger mistakes. This bill is about Bridgeport employees becoming non-working, long term liabilities. The savings are vapor. The costs are real.
“allows the city to bond unfunded pension liability expected to save an estimated $2.8 million in debt service”
1) How much unfunded pension liability does the City have?
2) Is bonding at a current guaranteed interest rate a way to save even more than $2.8 Million per year? If not, why not?
3) What is this specific unfunded pension liability? Is it from the historic non-funding of overtime for retirement benefits?
4) When did a Mayor or Council tell taxpayers that the move from Bridgeport Plan B to CT MERS would entail an $88 Million liability? Or about 28 years of funding at $7.5 Million?
5) Why do so few people comment on this subject that was written about last week from the address to the City Council?
6) Is there a guarantee in this State endorsed scheme that protects Bridgeport taxpayers from any further liability for the Police overtime, even when the state retirement board or actuaries lower the assumed interest rates from 8% to 7% or lower to 5% where credit rating agencies think is appropriate?
7) Answers? In the summer? Are you kidding?
Time will tell.
The votes in the General Assembly were as follows;HOUSE- YEA 143, NAY 43, Absent and not voting 4 SENATE YEA 30, NAY 6.
There are 213 CT “entities” that are part of MERS. It may be impossible to examine the qualitative measure of each of these entities but there must have been a reason they joined MERS. I noticed that only one entity from Trumbull is on this list,Fairfield has none and Stratford has one. Why would 213 join and “who know how many others chose not to join?
I’ve seen this article on Facebook but it’s a good read and tries a big picture approach; WHAT’S WRONG WITH CONNECTICUT?
http://www.msn.com/en-us/money/markets/what-on-earth-is-wrong-with-connecticut/ar-BBDNWp3?li=BBnb7Kz
Last evening the Budget and Appropriations Committee met to approve minutes, review the May monthly financial report, discuss some of the fiscal issues regarding parking meters (that Contracts committee may deal with Tuesday night, tonight) and review House Bill No. 7296, Public Act No. 17-107 that would authorize the funding of unfunded accrued MERS liabilities by municipalities. It was advanced by City politicians and the State delegation. I prepared questions in my statement to the City Council on July 3, 2017, sent to all City Council members and the press and posted on OIB within a day.
Last night I was the only member of the public present though when attendance was taken, all CC members and City employees were identified by name, whether they spoke or not and I was noted as “public”. When I raised my hand to speak, Chairman Scott Burns nodded NO and would not recognize me. That is his right according to Council rules but it is NOT OPEN, TRANSPARENT, HONEST or ACCOUNTABLE governance and voters should note that. When the meeting adjourned he indicated I should have called him with questions before the meeting and that I had had five minutes to speak in front of the Council in the previous week.
As a matter of fact my address to the Council had more than 15 questions that remain unanswered. Is the Council afraid that their understanding of pension plans and bonding is less than complete? Does anyone understand that Mayor Ganim’s first experiment in Pension Bonding is different from his second “concept” or “theoretical plan”? But does that make it any more likely to save costs for the City or only add to them? Time will tell.
No one has shown more interest in civic affairs than John Marshall Lee so it’s disheartening when his concerns remain unanswered. Bridgeport needs more CC members who are quick on their feet and don’t require JML’s questions in advance.
Just because the Chairman didn’t recognize you, doesn’t mean we won’t. Consequently, I’m taking this opportunity to nominate JML as OIB’s blogger of the day.