Norwalk political roundup: Truths and rumors
NORWALK, Conn. — Some Norwalk political information for you, all related to the City finances:
- Tax Assessor lives nearby
- Dachowitz responds to Meek/Brinton criticisms
- A look at Brinton’s “no infrastructure improvements,” “tax credits” statements
Tax Assessor not working from another state
Rumors that Tax Assessor William Ford didn’t live in Connecticut had a strong foundation when he first took the job, right before the pandemic started. Now they’re false.
Property records show Ford bought a Fairfield County home in late 2021. He sold a Massachusetts home in the same time period. Also, his name didn’t turn up in a search of Vermont property records.
Ford declined to comment.
Ford was working in Massachusetts when he was hired. He and multiple Tax Assessor staff members were working remotely when Evergreen Solutions conducted its efficiency study of City government, the consultant group said in its report released just over a year ago. Evergreen Solutions suggested the remote schedules be “altered.”
At that time, Ford told NoN that he’d been “unable to immediately make the transition of home ownership to Connecticut” after signing on to the job just as society shut down due to COVID-19. Much of his work involves court appearances and those have been done remotely, he said.
In December, Rilling said Ford is “back in the office a lot.”
“I can’t say he’s in the office every single day. But I can say he’s been in the office a lot more frequently. Because I for one was not pleased and I told Henry,” Rilling said, referring to Norwalk Chief Financial Officer Henry Dachowitz, Ford’s supervisor.
This year’s budget dilemma has inspired accusations from Independent Party State Central Committee member Lisa Brinton and Common Council member Bryan Meek (R-District D).
- Brinton said the Mayor’s Office is being disingenuous by presenting a .75% budget increase, alleging that it’s funded by a $6 million Rainy Day Fund drawdown and “taking $9 million from the retirement funds.”
- Meek said “$8.8 million is being taken out of the retirement healthcare trust fund to make it look like there is only a .75% budget increase.”
Norwalk Chief Financial Officer Henry Dachowitz called the retirement fund comments “misleading” and “diametrically opposed to the facts.” The City has planned a Rainy Day Fund drawdown in five of the last six budget cycles, he said. The exception was FY22, when the City planned to use $13 million of American Rescue Plan Act (ARPA) funds to offset a tax increase.
NoN first asked Meek and Brinton for a budget line showing the deduction from the retirement healthcare trust fund.
Brinton did not respond.
“It’s in employee benefits,” Meek replied. “$8.8MM is from OPEB. But it’s a total of $12 million down from $38 million last year to $26 this year.”
Dachowitz preemptively explained this in the initial presentation of Mayor Harry Rilling’s recommended 2023-24 operating budget to the Council Finance Committee on Feb. 9, a meeting Meek did not attend.
The CFO called the $12 million drop in employee expenses the “primary driver” for “only” a .75% increase on the City-side.
- Part of the $12 million decrease is related to health insurance. An error made two years ago sent co-pays to the Board of Education, not the City-side health plan, Dachowitz said. The BoE account had $5.2 million on June 30 and that money has been transferred back to the City.
- Then there’s $8 million due to OPEB (Other Post-Employment Benefits), “primarily health insurance coverage for our retirees,” Dachowitz said. The OPEB trust fund is 95% supported and “the last couple of years we were fortunate with good investment returns for those fundings.”
On Saturday, Dachowitz provided NancyOnNorwalk with a detailed explanation regarding the two issues.
Consulting actuaries Hooker & Holcombe state that only 45% of Connecticut municipalities have an OPEB Trust Fund and of those, “the average funded ratio is 43.1%,” according to information from Dachowitz.
Not only does Norwalk have an OPEB trust fund, but it was funded at 96.5% as of July 1, 2021, according to a draft report from Cavanaugh Macdonald, another consulting actuary. “This was an increase of 44.9% from the 66.6% ratio as of July 1, 2019,” Dachowitz said.
The draft report shows the OPEB’s trust fund’s value increasing in fiscal years 20 and 21, while the liability decreased. “Consequently, the Unfunded Accrued Liability declined by 91.0% from $49.7MM to $4.5MM,” Dachowitz said.
All of these factors added up to the decrease explained by Dachowitz on Feb. 9.
Dachowitz also characterized the planned Rainy Day Fund drawdown in the context of “economic uncertainties of the next 18 months.”
“Please note that the use of Rainy Day funds has nothing to do with the calculation of budget line item increases for the Board of Education and all the other City departments,” Dachowitz said. Mayor Harry Rilling first calculated budget increases and then the Finance Department did the complicated math to determine the Net Tax Levy. “So, you see the Rainy Day Fund Drawdowns have nothing to do with the budget increases by department – they are simply a strategic way for the Mayor, Common Council and Board of Estimate & Taxation to reduce the ultimate Mill Rates and Taxes Raised from our residents which are necessitated by the Net Tax Levy.”
Read the entire Dachowitz statement in this PDF:
Response Questions (2-25-2023)
And here are his exhibits:
Excerpts from Hooker & Holcombe 2022 MunicipalPension and OPEB Report
Excerpts from Cavanaugh Macdonald DRAFT Report on Norwalk OPEB Plan valuation date July 1 2021
Page 9 of FY24 recommended budget PowerPoint
Information added, 11:06 a.m.
Brinton offers info on ‘tax credit’ mantra
Perennial electoral candidate Lisa Brinton recently sought publicity for testimony she offered to a joint committee of the State Legislature, then backed off when NancyOnNorwalk asked her to clarify two questionable statements.
Brinton suggested NancyOnNorwalk publish the testimony she gave the Joint Education and Appropriations Committee regarding House Bill 5003, An Act Concerning Education Funding In Connecticut. The problematic passage (bolding by NoN):
“Our operating school budget is impacting the ability to fund other city services. Over the last decade, Norwalk became the darling of Hartford and target for increased state density, with fortress apartments to deal with nationwide housing shortage trends. Unfortunately, it hasn’t helped our schools and is placing a burden on our city’s infrastructure. Again, with no help from the state. Most of the complexes located in the heart of our city, have come with years and years of property tax credits.”
Regarding “no help from the state,” NoN pointed out that Norwalk has received State grants for infrastructure. One example: a $2 million grant awarded in October “to repair sidewalks, manage stormwater, install crosswalks, underground utilities, and repave and stripe West Avenue, Merwin Street, Berkeley Street, Orchard Street, Butler Street, Quincy Street,” according to a news release.
The other issue was “tax credits.”
In 2019, when Brinton was running for Mayor, NoN looked at this issue, posting a story explaining the difference between tax credits and tax abatement.
- Enterprise Zone tax abatements are awarded as of right. City officials are obligated to provide the benefit, due to an ordinance first approved in 1982. Originally effecting part of South Norwalk, the zone was expanded to include the West Avenue corridor in 2020.
- Tax abatements reduce the taxes owed only on the part of the property that’s been improved. Although developers pay less than they would on the improved portion, the City still receives more in taxes than it did before the improvements were made.
- Tax credits, on the other hand, are awarded on a case-by-case basis.
- Tax credits are federal and don’t involve City money or State funds. They can be sold to finance a project.
- Recent recipients include the Wall Street Theater and Soundview Landings, the Washington Village replacement. Wall Street Place is slated to receive Low Income Housing Tax Credits (LIHTC), should the 100% affordable housing complex be built.
NoN asked Brinton to substantiate the claim that “Most of the complexes located in the heart of our city, have come with years and years of property tax credits.”
She said NoN could print the testimony or not, declining to change the passage or explain.
2023 ECS Funding Testimony corrected
Brinton mentioned tax credits at last week’s Finance Committee public hearing on the operating budget.
After noting that she’s sometimes called a “broken record,” Brinton told Council members, “You need to speak to tax-cheating landlords with overcrowded unsafe multifamily homes, or Mayoral-campaign donor developers who received double-digit tax credits.”
NoN emailed Brinton and asked which Mayoral campaign-donor developers had received “double-digit tax credits.”
She provided an image showing the Enterprise Zone and said, “Everything built in those areas qualifies for tax credits.”
Again, those are tax abatements, not tax credits. Developers qualify for the abatements as of right, with no administrative decisions made at any level.
“Clay Fowler & Spinnaker & FD Rich are the two developer donors that readily come to mind,” Brinton wrote. “When Harry is getting donations from out of state – you can bet they are ‘investors’ … he has even admitted as much over the years. That he is proud folks want to ‘invest’ in Norwalk. Campaign finance is as dirty at the local level as it is nationally.”
Updated, 10:02 a.m.: Information from Lisa Brinton.
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David McCarthy February 28, 2023 at 8:00 am
The fact that Norwalk isn’t a train wreck like other cities is no excuse to underfund the city’s OPEB fund to keep Harry electable. These tricks will cause a crash eventually.
Harry’s Municipal Ponzi Scheme will blow up in time.
Also, Lisa talks in absolutes. Add the word “virtually” and her statement is true. Dribs and drabs of support still leave Norwalk holding the bag…
Bryan Meek February 28, 2023 at 8:52 am
Henry is not incorrect. He’s just spinning it his way with your support and doing some financial engineering that indeed disguises other departmental increases I gave you the direct link for, but you have left out for some reason.
Other actuaries could argue that we shouldn’t be relying on a 6/30/2022 valuation date from 8 months ago since the major stock market averages have been on the downtrend since then. The same way it could jump 44% in 3 years it could similarly crash. Why not make these budgetary decisions on real time data? Why rely on a date 8 months ago? I can only guess because it helps the narrative.
While I don’t disagree there is opportunity here to lessen the tax increases, it is not consistent with last years budget. 12 months ago we were in a very similar position financially with this fund and yet we still put $11 million into it. Why no reduction then?
Again, I’m not here to discredit the financial engineering, but it is undeniably masking over huge increases in city side spending.
One more time. Page. X (pdf page 21)
Not only are the schools asking for too much, but so are others.
David Muccigrosso February 28, 2023 at 9:23 am
Lisa, while I agree with your concern for our overloaded infrastructure, I think you’re missing the bigger picture.
For one, what money we DID get for infrastructure was overwhelmingly spent on some sidewalks that won’t be used for several years. Meanwhile, the streets that desperately need more crosswalks – Water St. between the SoNo Annex and its parking lot, and N Main, among MANY others in SoNo – are getting ignored.
For another, you’re absolutely right that the “fortresses” are ugly boondoggles — and I’d lump in the mall as well — but that doesn’t erase the fact that we’re in a national housing crisis.
Just to reiterate what I always say, if we want “gentle density” without disruptive “fortresses”, we need to upzone everywhere to automatically allow the next increment of density. Let the market take its course, and get everyone’s nosy neighbors out of each other’s business.
And let’s stop wasting money on infrastructure where it’s least needed, so we can spend it on the places that absolutely DO need it, like SoNo. A dollar spent fixing a sidewalk in SoNo is going to go a LOT farther than a dollar spent fixing a sidewalk in Rowayton (no offense, Lisa!).
Bryan Meek February 28, 2023 at 12:03 pm
So OPEB was funded at 97% on the 6/30/22 balance sheet date. Actuarially speaking this is a very comfortable number.
What I take issue with is this is being forecasted as a 1 time reduction. Not a series of lesser inflows at completely at odds with recent historical contributions.
P.321 (pdf page# 347) https://www.norwalkct.org/DocumentCenter/View/29072/FY2024-Recommended-Operating-Budget?bidId=
I like playing the market too, but I don’t think it’s that good of a strategy for a 110 year old entity that plans to be around for awhile.
I would feel better about the drawdown if it was permanent. Not a one time gimmick.
Bryan Meek February 28, 2023 at 12:07 pm
Tax credits and abatements have been around for sure, but to blame an ordinance from 1982….puhleeze. Maybe pot stores and leaf pack blower bans will fix things?
David Muccigrosso February 28, 2023 at 5:31 pm
After reading that report, @Bryan, I’m more appalled that the motto on the Norwalk seal just uncreatively rips off the federal government’s E Pluribus Unum.
I propose that in the Town Charter update, we revise the motto to this: “Numquam Fluvias Cruciate”
If you can get this done, well, I can’t exactly buy you a beer (that’d be bribery, ofc), but I’ll raise a toast to your name down at the Blind Rhino.
Bryan Meek March 1, 2023 at 10:26 am
Having studied Latin for 4 years I really like that. Although it would be more appropriate to say it takes a half hour to cross the river. I’m a big fan of the blind rhino. Best wings anywhere.
David Muccigrosso March 1, 2023 at 1:53 pm
Ahh, in this context, it’s not supposed to mean “river”, but “streams”… reread it, friend!