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To the Editor,
On June 12, before hundreds of concerned residents and employees of the school system, members of the Norwalk Common Council were asked to support a resolution that would have provided $4 million to the Norwalk Board of Education. Even though that resolution was referred back to the Finance Committee and ultimately defeated a few days later, I believe it is important to discuss the reasons so many council members could not support the obviously well-meaning resolution. (Before continuing, I should mention that even though I was a member of the Council's Finance Committee for eight years, and its chair for four years, I am currently not a member of that committee. I do attend its meetings, but I do not have voting rights.)
There are four reasons why I could never support such a resolution:
■ The first reason is that the wording of the resolution required the BOE to repay the $4 million over a period of four years. The BOE does not have the legal authority to take out loans. Nor does it have revenue streams, apart from the federal, state and city governments, upon which it might craft a repayment schedule. And finally, there is really no way for the council or the Board of Estimate and Taxation to collect repayment, other than by drastic reductions of future budget requests.
If the resolution had passed, I am certain that down the road council members would again be facing hundreds of concerned parents, but this time they would be carrying placards that said, "Forgive the Debt." The bottom line is that the BOE does not have the legal authority, and with good reason, to take out anything that resembles a loan.
■ The second reason I could not support the resolution is because it was essentially a one-time cash infusion to address a structural problem. This is a serious issue in the world of finance and has been the downfall of many local governments. Structural problems, unless addressed and eliminated, are recurring. The BOE's recent shortfall appears to have originated in the area of special education, and the board has still not been able to provide assurances that it will not happen in future years. (The details of what happened are still being examined by the city.)
This is an important point: The fiscal pressures that caused the shortfall still exist. The board, through no fault of its own, cannot control these pressures (the worlds of insurance and special education are governed by a variety of laws). Thus, the resolution was basically asking council members to provide a quick fix to a problem that will likely reappear next year and in the year after that. And to require the board to begin repaying the loan – while simultaneously addressing the rising costs of insurance and special education – is asking the impossible.
■ The third reason I could not support the resolution is because it would have required the city to withdraw $4 million dollars from its Rainy Day Fund. It is important to note that the city has already dipped into that fund, to the tune of $2.2 million, for the 2012-13 operating budget ($1.1 million was withdrawn to finance the state mandated 2013 property revaluation, and a similar amount was withdrawn for various operating expenses.)
Another withdrawal – especially a short-term fix to a structural problem – could very well jeopardize the city's AAA bond rating. Many residents, and a few council members, have questioned the city's sensitivity to the opinions of rating agencies. But I share that sensitivity. According to the finance department, if our bond rating were reduced to a AA rating, the costs in additional interest payments on capital projects – costs that would have to paid by taxpayers – over a 20 year period (assuming our capital expenses remain roughly the same) – could be as high as $22 million.
A reduction in the city's bond rating would make it difficult in the near future to fund various construction projects, road repair, etc. Our infrastructure, which is currently in need of repair, would undoubtedly deteriorate further. And, as mentioned, the debt service portion of the operating budget would rapidly rise, thus (and ironically) making it even more difficult to fund future BOE operating requests.
■ The fourth reason I could not support the resolution is that it was not vetted by any committee. It came to the Council on short notice (I didn't see it until a few days before the packets arrived) and was written, apparently, without anyone having addressed the issues raised in this column. Two days after the full council meeting, the finance committee met and all of the issues associated with the shortfall and a $4 million withdrawal from the Rainy Day Fund were thoroughly discussed. At that point, committee members defeated the resolution.