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Opinion: Is Detroit a cautionary tale for Norwalk?

NORWALK, Conn. – Detroit, a once-great American city – think auto industry, Motown, City of Champions – declared bankruptcy last week. The city’s financial demise was apparently hastened by the economic crash that closed auto factories, left tens of thousands of people unemployed and sent hordes of people scurrying to find work and housing elsewhere. The city has lost 25 percent of its population, and the related tax revenue.

But that is simplifying the situation. A story on NBCNews.com puts Detroit’s crash into the broader context of what is happening in cities and towns across the country, and says Detroit may well be the canary in the coal mine. This is not a political piece. There is no partisanship. It is not a long, in-depth analysis. Rather, it raises a few issues that hit home in Norwalk, issues relating to pensions and other expenses that are handcuffing municipalities at budget time.

This is particularly apropos here as we enter into the meat of the campaign season to choose who will lead Norwalk, as mayor, Common Council and Board of Education members over the coming years.

Click here to read the piece, which is part of a news roundup column.

 

Comments

15 responses to “Opinion: Is Detroit a cautionary tale for Norwalk?”

  1. Piberman

    The absence of tax and municipal salary/benefits discussions telegraphs continued stagnant property values here in Norwalk as the likely outcome as far as the eye can see. Never mind a 15% national increase in the past year. For years and years the BOE, BET and Mayor looked the other way as the NFT obtained the 5th highest salaries in the state with very generous benefits. None of the Mayoral aspirants nor future seekers have any professed interest in creating affordable government for Norwalk. The end result is an ever more “transitional” city where the landscape is dotted with “for sale” signs and politicians talking endlessly about “growing the Grand List” as the means of tax salvation. At days end Norwalk is governed for its employees. Long term residents remember when modestly paid municipal workers worked for the City’s residents, not vice-versa. And lived in town. The City is held hostage to its well paid workers. And our political leaders are seemingly indifferent to the financial once runs of our residents. That is a tragedy. Norwalk’s future is ever higher taxes, stagnant property values and an ever more transitory population seeking lower CT’s municipal services elsewhere.

  2. Suzanne

    Piberman, Mr. Miklave has repeatedly talked about his plans to analyze and streamline every last piece of Norwalk’s operations/government. The platform section of his WEB Site explains how he would do it. According to the link, what has bankrupted Detroit is the out-sized bureaucracy desiring out-sized salaries and benefits and “traditional” pensions. Clearly, with the cost of healthcare and the cost of living in Fairfield County some fair compromise must be reached. I agree, though, with the idea that the City of Norwalk is a government that lives to promulgate itself, not to serve the constituency for which it is employed. That is the nature of bureaucracy everywhere and the nature of bureaucracy: it seeks to multiply itself for itself without context. However, it is there to serve US not the other way around. My Dad, a proud California bureaucrat from the “old tradition” where he and his colleagues knew they were there for the citizenry, and, later, a professor, always said, “The way to decrease bureaucracy is to lower the budget.” Chances are, City services would be no less effective but employees would have to work harder. Given my mixed experience of City Hall, I do not believe this would be a bad thing. Some there might even learn to do what they do far more effectively.

  3. Ken P Jr

    Our issues in Norwalk are as much related to what we give away to people who contribute NOTHING as it is to what we give our employees. We are held hostage as much by Roodner Court, Washington Village etc as we are by our employees compensation.We need to start crafting an efficient city government whos job is simply to keep the wheels turning at the least expensive rate it can be done. While we might not be able to cut salaries, we can stop hiring or hire with new contracts more inline with what we can afford. While we might not be able to bulldoze our crime ridden houseing projects we can stop gathering new tennants. When an apartment is vacated lock it up. When enough vacancies accumulate to close one project do it & move the remaining people to another one, and so on, until its affordable for us. Us Being the taxpayers. A large part of our problem are the numbers on assistance here. They all get to vote & they arent likely to vote for fiscal responsibility when they live off of fiscal stupidity.
    The cost of living here is DIRECTLY related to the cost of govt here. Our food, clothes, houses etc would be much cheaper if our govts werent so expensive. Our police, firefighters, DPW, Parks & Rec, and everybody else make more than the average person in a similar private sector job. There was a time not so long ago when a city job wasnt going to get you rich, but it was steady reliable income with excellent bennies. Today its top pay & bennies. Many of us paying taxes here have seen huge pay cuts since 08, but nothing has gone down for anyone working for the city, they still got raises, as if the recession is not really going on. Theres no incentive for the city to act rationally or in a compassionate way towards the taxpayer because they are effectively shielded from the reality of living here. Its a complex issue but certainly one that will be adressed sooner or later. Sooner being much better to the REAL shareholders, the taxpayers. The city employees largely live elsewhere & the project dwellers are better served by milking us until we are broke. But the working taxpaying families in the city, the ones paying for it all, deserve quick action.

  4. jlightfield

    Comparing Detroit’s issues and Norwalk’s issue is superficial drive-by opinion journalism at best. The manufacturing industry that was the core economic engine of Detroit is the root of Detroit’s tax base challenges. Political leadership in Detroit never saw past the inevitable end of a low-skilled economy workforce and never invested in anything that brought new industry. Meanwhile Cleveland and Pittsburgh, fced the same manufacturing declines but did have better political leadership and diversified its economic base.

    Pensions and municipal obligations are now the focus in Detroit because corporate types are attempting to ditch the obligations in order to pay off bond debt. So there’s your philosophical argument in a nutshell, who is the creditor that gets paid, banks or municipal workers?

    Norwalk is not facing such a dilemma. Our bond debt is relatively low, and our pension funds are not underfunded. The solid economic evidence globally is that you cannot cut your way to growth. Nor can you spend recklessly on things that do not improve productivity or generate revenue. Until political leaders learn that lesson, municipal revenue will remain stagnant or decline. It is economics 101.

  5. Bruce Kimmel

    Comparing Norwalk to Detroit might be interesting, but is still like comparing apples and oranges.
    .
    Ignoring the fact that state laws regarding municipal labor contracts (we have binding arbitration)and budgets (no deficits allowed in Ct.)are different, Norwalk has come through the recession with a healthy fund balance and AAA bond rating. That says a lot about our ability to handle whatever the future has in store for us as a city.
    .
    Our Charter requires us to make full contributions to our pension funds and thus they will never be underfunded. We have a plan in place to deal with the healthcare costs of our retired employees and that fund is in relatively good shape considering the recent recession. And finally, we have moved to a defined contribution plan (similar to a 401K) for all new hires. That, too, will limit our future pension costs.
    .
    Also, we have been cutting our healthcare costs little by little over the years by increasing the co-pays and premiums paid by city employees. Moreover, there is some evidence that these costs nationally are beginning to increase at a much slower pace; but whichever way they go, we have a handle on this aspect of our budget.
    .
    There have been some attempts at what I consider risky fiscal behavior on the part of a few elected officials, such as raiding our post-retirement healthcare fund to pay for other operating expenses, or drawing down our fund balance below the threshold needed to maintain our AAA rating. But all in all, we have been cautious and prudent.

  6. Tim T

    Norwalk could very easily become Detroit if we don’t do something about
    *Crime
    *Out of control police overtime
    *Consultants at 500.00 per day
    *Gangs
    *The do nothing dead weight at city hall
    *Benefits and retirement that are insane
    *A city charter from the 19th century
    *The common council system of government
    *The old boys club that has been around way to long
    *The lack of term limits for ALL elected officials
    *City employees that don’t live in Norwalk and could careless about Norwalk

    Shall I continue

  7. Obamanation

    Norwalk would better heed the lessons learned by Central Falls, RI or Stockton, CA. which promised more in pension benefits than they could ever afford. Defined benefit plans are dinosaurs that will eventually unwind, but will bankrupt a lot of cities along the way. Norwalk fortunately is not in that position, although macroeconomic forces could potentially cause pain for property tax payers that could in turn hurt the cities finances, so we do need to be on guard.

    Detroit is in the shape it is in because of global competition in the auto industry. The big 3 automakers gave into union pressures and learned the lesson that you can’t pay high school graduates over $100k a year to do basic assembly work and stay in business. But they didn’t really learn this lesson, because President Obama liquidated the bond holders rights and gave equity to the unions. This is entirely contrary to our bankruptcy laws and here we are five years later and Detroit is still going down. Why, because in doing what Obama did he removed any incentive for debt markets to function properly and no one is investing capital, because Obama can decide to abrogate the rights of the investor on a political whim. This is why Detroit is failing and why there are fewer people employed as a percentage of our population than at any time in history. When risk is introduced into markets, you get less investment.

    The macroeconomic forces that are starting to cause pain is from the U.S. Treasury department who monetizing debt by devaluing the dollar as fast as they can and that will help the situation on long term debt instruments, but the consumer will end up eating the inflation.

    Fed Reserve chairman Ben Bernanke all but admitted that we are printing money out of thin air this week in testimony to congress.

    In the last five years, the supply of dollars has increased almost 3 fold. The end result of that is things will cost 3x as much soon. This is an economic fact that will be unavoidable

    We are starting to see the effects of this in the gasoline market which can’t be controlled by the US as it is a global commodity.

    $4.10 for regular today even though five years ago gasoline demands were 30% higher. If and when the economy starts heating up, we will be looking at $10 gas and home heating oil. That could start to cause homeowners to default on local property taxes.

    So while Norwalk is not Detroit, we are still at risk from what is being done to our economy right now. Printing 6 trillion dollars out of thin air and not having a net gain in jobs from it is hard to imagine, but that’s just where we are. Question is, where is the money going?

  8. M Allen

    I agree with jlightfield – the question itself is really a pretty baseless comparison. Better to focus on not becoming Bridgeport rather than worry about whether there are any parallels between Norwalk and Detroit. So many others here have commented on the manufacturing sector and the fact that Detroit did nothing to counter the loss of it, so there isn’t a lot to add to that argument. Norwalk has its own brand of problems, as do many cities around the country. The biggest problem is not the future obligations to city retirees. Rather, the bigger issue facing cities and states across the nation is how to handle the ever growing ranks of people at the bottom that everyone else must help to support through tax dollars. The faucet will run dry at some point.

  9. EveT

    I disagree about “the ever growing ranks of people at the bottom” — what Norwalk needs is to continue attracting people who are on their way up in life instead of their way down. Young professionals who appreciate all that Fairfield County has to offer and who are motivated to contribute their own time and talents to making Norwalk an even better place to live, work, and raise a family than it already is. Not everyone can afford to live in Greenwich or Westport, but everyone can do little things every day to make their community better. People who just want to sit around and complain are the dead weight we don’t need.

  10. Tim T

    EveT
    You state
    People who just want to sit around and complain are the dead weight we don’t need.
    Actually its the exact opposite as we need MORE people that complain . See is people as in taxpayers don’t complain our elected officials seem to think it’s ok for business as usual

  11. M Allen

    @Eve T – what exactly do you disagree about “the ever growing ranks of people at the bottom”? What part of we can’t continuously expand the group of “tax users” while shrinking the group of “tax payers”? This starts at the federal level and trickles its way down to each individual municipality out there. Attracting people on their way up, as you put it, is a novel idea. But those people look at a city and ask themselves: what will I get out of living there versus what will I have to pay. Thew ultimate nail in the coffin of Detroit, as in Bridgeport to a lesser degree, was not just the jobs going away, but the people who could afford to leave chose to do so. That leaves behind those who did not have the financial ability to make that choice and I’m not sure that those are the people who tend to pay the taxes that support a city.

  12. Joe B

    Can anyone say… Unions?

  13. LWitherspoon

    We’re a long way from becoming Detroit, but it’s valuable to look at what happened there. Will we become the next Detroit? It depends on the number of people who choose to live in Norwalk despite having the financial wherewithal to live in “leafier” neighboring towns. It also depends on whether or not we elect politicians who represent the best interests of taxpayers rather than the best interests of municipal employee unions. Tax increases of 4% per year are not sustainable indefinitely, especially when they aren’t increasing at that rate in neighboring towns.

  14. Piberman

    Three years of stagnant property values ought to suggest to all parties that fiscal discipline is required to keep govt affordable. Our median household income is only about $72000. Yet median home property taxes exceed $6,000. And our employees are among the highest paid in the state. Clearly we need more capable dept heads to do more with less resources, smaller staffs, more outsourcing and a BET staffed with real financial heavyweights willing to hold dept heads feet to the fire. That takes a determined local govt not just a is cal reform minded mayor. Funding excessive salaries/benefits dates back decades in Norwalk. It really does take a determined citizenry to demand fiscal discipline. Holding the line on property taxes would be a good start. No candidate is willing to hold the line on property taxes so its more the “same old” politics.

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