BET Member Argues Greenwich Spending Is on 'Right Track'

BET on the Right Spending Track

Words have recently been written criticizing the BET for not spending enough money on important town and school capital needs.  There are some, including a few current Democrat members of the BET, that want to dramatically alter the Town’s Debt Policy by significantly raising our debt ceiling and extending the terms of our bond financing.  They want to greatly increase spending on projects that will add to our annual operating and capital budgets thereby forcing taxes to rise well beyond the recent mill rate tax increases of 2.75% over each of the last two years.

The Republican members of the BET have been unanimous in their support of low and predictable tax increases while providing for the largest capital spending plan in the history of Greenwich ($46m in 2012-13 and $57m in 2013-14).  This includes $26m for Nathaniel Witherell (NW), $40m for MISA and $20m for a new Central Fire Station (CFS).  The Board of Education’s usual capital allowance was reduced 20% to $8m in 2012 and 10% to $9m in 2013 in order to help cover the expanding $40m budget of MISA.

This summer the BET reviewed its Debt and Fund Balance Policies that were first established in 2011.  The policies were created in order to placate credit rating agencies’ desire to measure Greenwich’s financial strength using guidelines commonly used for other municipalities.  Our Debt Policy established a debt ceiling of $210m ($3,367 per capita) and recommended the use of multiple one-year bond anticipation notes (BANS) and 5-year bonds.  Working under state statutes, the BET was allowed to fund Nathaniel Witherell and sewer projects for up to 20 years.  The Town has worked to stay within our guidelines and today earns the highest ratings from all agencies.

As we reviewed our Debt Policy this summer some Democrat members of the BET repeatedly urged that we more than double our debt ceiling to over $430m ($6,894 per capita) and extend bond borrowing on most projects up to 20 years.  Why?  Their reply: because other communities in CT and the nation spend at those per capita levels and terms.

A review of our current financial strength shows why these suggestions are reckless.  Despite funding over $86m for MISA, NW and CFS and setting aside funds for addressing soil remediation, our total debt, according to our Town’s Comptroller, is currently at about $149m.  At its highest in 2014, our debt is expected to reach $183m before retreating to lower levels in subsequent years - nowhere near our debt ceiling of $210m.  By 2015, financing of Glenville School, Hamilton Avenue School and the Police Safety Complex will have been paid off.

The BET Republicans are unanimous in their desire to continue financing with multiple 1-year BANS and 5-year bonds.  In reality, MISA will be financed over 10 years through this flexible process.  The Town paid for initial planning, design and engineering expenses out of available cash flow.  Only recently has the Town financed with BANS and 5 year bonds as large expenses were incurred after years of delays.  Had we borrowed with 20-year notes from day one the Town would have incurred large interest payments before construction even started.

There are a number of important capital projects that need to be considered for the near future.  The dredging of Binney Pond, rebuilding of Eastern Greenwich Civic Center and renovation of more school buildings are top of mind.  The BET reviews the First Selectman’s Capital Improvement Plan annually and does its best to fund the top priorities. 

Some have questioned why not borrow hundreds of millions of dollars now to tackle all of our important jobs immediately.  The answer is that our Town has significant managerial and system constraints and is stretched to the limit.  Our Department of Public Works is busy with the new Central Fire Station, Transfer Station improvements, Cos Cob Park enhancements and other vital projects. The MISA and NW projects are supervised by two building committees of volunteers who have dedicated thousands of hours over the last five or more years.  Unfortunately there are only a few Town residents with the expertise and willingness to tackle these jobs.  System constraints include increasingly cumbersome approval and permitting processes within the Building Department, P&Z, Wetlands and other local and state regulatory agencies.  Obtaining building permits, passing inspections and getting final certificates of occupancy just take more time.

The BET is currently reviewing its Budget Guidelines for the 2013-2014 fiscal year.  The Republican members believe a mill rate tax increase of 3% or less falls within our desire for low and predictable taxes, especially as our national economy is still affected by the recession of 2008.  This rate still provides $28m for the final stages of MISA, NW and CFS, and additional improvements to our aging infrastructure and facilities.  The Town will still be well under its debt ceiling of $210m and in a position of financial strength that is the envy of any municipality in Connecticut and the nation.