Gambardella: Hamden’s Finances Continue to Worsen

This was written by Hamden Republican Town Committee Chairman Ron Gambardella.

According to the recently published Fitch credit rating agency report, the town of Hamden has once again had its financial rating lowered. As the debt rating is lowered, the cost of borrowing generally increases. Investors demand more return for the increased risk associated with aweaker financial position.

This is important because Hamden will most likely have to pay a higher rate of interest to sell its bonds in the market place. The lowered rating with a negative outlook could not have come at a worse time. The Council is considering selling Pension Obligation Bonds to shore up its failing pension fund. If the Council approves this strategy, the town will have to pay more in interest to attract buyers for their bonds. This translates to higher taxes.

If this news wasn’t bad enough, “Fitch estimates a tax rate increase of about 4.2 mills or 10.9 percent would be necessary to meet the projected increased annual pension cost.” So if you are paying about $5,000 per year in taxes expect that to increase to $5,545.

If you’re thinking I can handle that, then you would be overly optimistic because this is just the tip of the fiscal cliff. Fitch also went on to say, “The funded status of the pension plan has been extremely poor for some time and continues to deteriorate. The July 1, 2012 funded ratio was 14 percent and the unfunded actuarial accrued liability (UAAL) was $360.4 million. Over the past five fiscal years, the town has contributed $46.6 million compared to the aggregated ARC of $100.2 million. In fiscal 2013 the budgeted $9.5 million for pension compares unfavorably to the $27.7 million ARC. The town also has a large unfunded other post-employment benefit (OPEB) liability of $440 million. Hamden funds its OPEB on a pay-as-you-go basis, contributing $15.8 million in fiscal 2012.”

Now I realize this is highly technical and few readers can understand the details. I will make itas simple as possible. The town’s financial obligations to its current and retired employees is so large that unless there is a fundamental restructuring of the entire town, there is no way we can meet these obligation without steady and significant tax increases.

This problem has been festering for years. It is worth restating the council members who lead us into this financial mess. These members have been on the council during this period and in some cases many years prior to this period. They are: Al Gorman, Carol Noble, Jack Kennelly, Oswald Brown, Michael Colaiacovo and John DeRosa.

Who are you voting for in November? Put ideology aside and consider voting for candidates who are committed to resolve the town’s financial problems. The aforementioned councilmembers clearly are not.

Ron Gambardella
HRTC Chairman