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Letter: AAA bond rating does not mean Norwalk is fiscally sound

By Peter Berman

To the Editor:

NORWALK, Conn. – Recent op-eds by heads of the Board of Estimate and Taxation (BET) and Common Council gave the city high financial management marks because of its AAA debt rating renewal. For decades Norwalk, like the surrounding far wealthier towns, has received AAA debt ratings. But that mostly reflects southwestern Fairfield County’s robust job market. Connecticut, too, gets high bond ratings even though it’s an acknowledged national poster child for egregious fiscal mismanagement.

Claims of superior Norwalk’s superior fiscal management make for good politics but poor financial analysis. The recent Arbitration Award Panel’s report, using city supplied data, identified Norwalk as having the state’s fifth highest teacher salaries – more than any other city. Despite having only the 17th highest income. With two-thirds of the city budget spent on public education that makes Norwalk the highest cost provider of municipal services of any city in the state.

That’s not an A but an F.

Norwalk’s average employee cost is about $100,000, far overshadowing our modest $72,000 median household income. And, we have a substantial number of residents requiring public assistance. Large numbers of city employees earn more than a $100,000 and our $150,000 administrators are legendary. The city is Norwalk’s largest employer and its employees, as a group, the best paid.

The arbitration panel also called attention to the consequences of Norwalk’s punitive real estate taxes needed to finance our high cost employee salaries on our property values. The panel noted our residential properties declined much more than those of surrounding towns during the recent Great Recession. Since then Norwalk properties have been stagnant even when nationally we’re in the midst of a major housing boom – a sure warning sign.

Even during the Great Recession, when many residents lost their jobs, the city raised taxes and spending, putting the needs of city employees ahead of its residents. That’s both mean spirited and poor fiscal management. Traditionally, municipal employees were paid lower than the private market in return for job security. In Norwalk it’s all been reversed, with both better job security and higher salaries/benefits to boot. Only in Norwalk were ex-spouses of public school teachers paid benefits at taxpayer expense.

Norwalk’s grand list has been stagnant, and come this fall’s revaluation will likely fall. The comparison with Stamford is awesome. Once closely matched, Stamford’s grand list has soared. Soliciting “Big Box” has made the city a retail hub with low valued added properties while the decades-vacant big hole along I-95 signals an inability to attract high valued added development. High taxes, big box mentality and stagnant property values send strong negative signals to the business community.

The city’s tax arithmetic is scary. Continuing this year’s 4 percent tax increase in property taxes means a 22 percent increase over five years, 48 percent over 10 years and 100 percent, to over $12,000, in 18 years for the median valued home. Similar raises would give us $300,000 administrators and city employees costing us $200,000 on average two decades hence.

Continuing our current tax-and-spend policies will likely further depress city residential properties. We’re now three years into our economic expansion with perhaps another year or two to go. Rising interest rates will further depress our already stagnant real estate market. There’s no additional relief likely from our beleaguered state finances. And southwestern Fairfield County’s economy is feeling the negative effects of the governor’s tax and spend policies.

What can be done? First, is to recognize that it’s truly essential that we change Norwalk from a high cost provider of municipal services to a low cost provider. Otherwise we risk the Bridgeport scenario. Stagnant property values and grand list along with “for sale” signs are serious warning signs.

A good first step is demanding city officials hold the line on taxes for a year or two. That will encourage our city managers to do more with less rather than demanding ever more resources to do the same job year after year. Downsizing is not rocket science but does include reducing payrolls, capping salaries/benefits where possible, further outsourcing, much more aggressive contract negotiations and likely hiring more capable managers at lower salaries.

Second, the city needs to reformat the BET into a real fiscal watchdog staffed with citizens having major league experience as CFO’s of large corporations, who have real world experience in downsizing. Not as a place for the well connected.

City officials will claim they are making progress, citing refuse outsourcing and reducing benefit costs when contract negotiations permit. And that they inherited these problems. But the city continues to raise taxes and spending year after year and at rates above our unusually low inflation rates both in good times and bad. Making Norwalk into a low-cost provider of municipal services may well need a new team of city managers, highly committed elected officials and a determined electorate.

It took decades to make Norwalk a high-cost provider of municipal services. So it can’t just be undone by sitting round the table, changing mayors or inviting developers to breakfast. Again, the two critical steps are freezing taxes for a year or two and reorganizing the BET into a real fiscal watchdog, staffed with major league CFO professionals who know how to downsize organizations.

Despite the politicians’ claims to the contrary, even everyday folk know that rising taxes on stagnant property values, stagnant grand list, ever rising taxes and spending and for sale signs are real warning signs of failing fiscal management. It’s long past time to put fiscal management on the election agenda. We all can’t move away.

 

Peter Berman

 

Comments

5 responses to “Letter: AAA bond rating does not mean Norwalk is fiscally sound”

  1. Bruce Kimmel

    I believe the average property tax increase for Norwalk during the four years prior to this year was 1.8%. Please correct me if I am wrong. This year’s property tax increase of 3.7% was due in large part to a one-year spike in pension costs and a desire to fully fund the BOE’s operating budget request.

  2. EveT

    Mr. Berman makes some valid points, but how would “further outsourcing” help our financial situation? Outsourcing often looks like a good deal when the lowball bid is chosen, but the quality of service almost always declines. See City Carting, for example. Fiscal responsibility involves not only controlling costs but also providing VALUE for money paid.

    Many of us would not mind paying the taxes we pay if we saw Norwalk making good productive use of the money to improve our community.

    Instead, as just one example, at Calf Pasture & Shady Beach we got ugly concrete benches and tables and ugly brown paint on all the wooden fences that started to peel off within a year. Why? Because the money was in the budget and if not spent it would go back into the general fund. That spend-it-or-lose-it mentality is the kind of thing that makes taxpayers mad.

  3. Anna Duleep

    Another area of concern is the 20%+ pay increase for the next Mayor. I still cannot believe I cast the only vote against such an exorbitant pay raise (Matt Miklave recused himself). To argue that a Mayor should earn more than his/her department heads, then increase the Mayor’s pay over and above that of overpaid department heads, is foolish! While increasing remuneration may, theoretically, help attract better mayoral candidates, we had five men fighting for the job well before this raise was approved.

  4. Independant Voter

    Mr. Berman’s long, rambling letters generate lots of heat but no light. A shoot first and aim later approach.

  5. Piberman

    It would be helpful if our City officials offer explanations for our stagnant property values, stagnant Grand List, “for sale” signs and decades long failures at redevelopment, eg the I-95 “big hole”. And why they disagree with the Arbitration Award Panel’s Report citing our higher taxes as causal agents in our larger property declines.

    If its not our higher taxes and salaries could it be the water ?

    The absence of any discussion about taxes and salaries/benefits by either the Mayor or candidates suggests only one alternative – voting with ones feet. Many Norwalk home owners are doing just that.

    Citizens who have no problems with our taxes and municipal salaries/benefits should not complain about stagnant and declining property values – a good test of a community’s attractiveness to outsiders.

    Maybe Norwalk can turn basic municipal finance upside down. Lets really raise taxes and see if property vales rise !

    If politicians are reluctant to discuss taxes, budgets and salaries during an election year they know a timid electorate will hardly protest future tax hikes. When it comes to taxes and salaries Norwalk’s GOP and Democrats do agree – higher is better. Just following our state legislators. Glory be.

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