By Peter I. Berman
To the Editor
NORWALK, Conn. – In a recent OpEd, Fred Wilms, long-time chairman of the Board of Estimate and Taxation (BET), claimed Norwalk’s economy was strong, having rebounded from the Great Recession with city finances in good shape. Even though it’s election season, the evidence is overwhelming in the other direction. Property values are a good indicator here.
The city’s Grand List remains stagnant, falling increasingly behind Stamford. Norwalk’s residential property values have remained stagnant for three years despite a pronounced national housing price rebound. Commercial and industrial development remains tepid by any standard. Our predominantly residential city remains a poster child for decades-long failed redevelopment efforts.
These depressing developments are hardly surprising now that we’re three years into the national recovery. Norwalk has the highest municipal salaries of any city in the state. Only five small communities pay their teachers more than Norwalk (see the recent Arbitration Report), yet our incomes rank just 19th in the state. There’s long been a major disconnect between our median household incomes – about $72,000 – and municipal worker compensation now averaging about $100,000. Norwalk’s “golden” union contracts and legions of $150,000 administrators are legendary. Many of our city and school administrators earn as much if not more than Gov. Dannel Malloy. City government is both the largest and best-paying major employer in Norwalk. Reportedly, most city employees live elsewhere, where taxes are lower.
Stagnant local property values and Grand List some three years into economic recovery hardly buttress BET Chairman Wilms’ ambitious claims. Yet our legendary municipal salaries and punitive real estate taxes are not recent developments. Even during the Great Recession, Norwalk’s taxes and spending rose in contrast to sharp declines in municipal and state spending nationally. Norwalk’s “golden union contracts” mirror those handed out in Hartford – among the best in the nation. Sadly, neither mayoral candidate talks about out-of-control taxes and municipal salaries.
Punitive property taxes largely explain Norwalk’s stagnant property values. Indeed, the recent Arbitration Report took special notice of Norwalk’s much higher property taxes as being responsible for Norwalk’s much sharper property value declines during the Great Recession, compared with surrounding communities. High property taxes required to finance excessive salaries are a two-edged sword. Collectively, Norwalk property owners have foregone billions of dollars of anticipated property appreciation. Long-term retired residents are especially penalized from high property taxes. Their only recourse is to post a “for sale” sign and move.
Norwalk’s political leaders have long promised property tax salvation from encouraging new business development. But the city’s well-known high property taxes keep developers distant, save the big boxes largely responsible for sweeping away much of the city’s once energetic small business community. Promises of salvation through “growing the Grand List” are empty, indeed. High property taxes discourage both development and private sector jobs growth.
What can we do ? Neither mayoral candidate (or political party) has taxes and spending on the front burner. A good start would be holding property taxes unchanged for several years. That would force department heads to work harder with fewer resources and encourage the Common Council and city officials to work much harder negotiating with public unions. They can learn from the Board of Education’s recent success. Not rocket science.
Longer term, extending the terms of the mayor and Common Council to four years may have some merit. Term limits warrant discussion. There’s no value from council members “serving” for decades. A revitalized Democratic Party could be helpful, but our experience with state budgets in Hartford suggests otherwise. Maybe the best suggestion is eliminating the ineffective BET and electing a Board of Finance, as do many well-managed communities. Hopefully, citizens with credible financial backgrounds would seek election.
Norwalk’s stagnant property values and Grand List during these past three years amidst a vigorous national housing recovery has firmly demonstrated the well-known linkages between excessive municipal salaries, punitive property taxes and depressed property values. Collectively, our residents have lost billions of dollars of anticipated property appreciation. As long as it’s business as usual, the only real winners are the city’s employees, as properties are caught in a vicious cycle of ever-higher property taxes and lowered values.
Making Norwalk once again a prosperous and affordable city requires
financially knowledgeable elected officials firmly committed to financial discipline. Unfortunately, neither political party nor the candidates presently have that commitment. And the business community has taken notice. The smart money is betting an ever-more transient Norwalk and further property value declines come the next recession.
Not everyone can work for City Hall.
Peter I Berman