Thursday, June 26, 2008

"Washington Game" Comes to Westport

Drop Cap Letter: In his new book, “What Happened: Inside the Bush White House,” former White House press secretary Scott McClellan refers to what he calls “the Washington game.”

“Washington has become the home of the permanent campaign, a game of endless politicking based on the manipulation of shades of truth, partial truths, twisting of the truth, and spin,” he writes.

Unfortunately, we are now seeing the Washington game making an appearance in Westport. The issue is supposed poor fiscal oversight on my part involving the town’s obligations under new accounting rules for municipal employee post retirement benefits.

As much as critics would like to spin this into something more than it is, here’s the explanation of what happened, and why I--like everyone else--was surprised by the last-minute magnitude of our projected obligations.

The town’s obligation to adhere to the new accounting standards is not a new issue. It’s something we have been working on for several years, led by our late long-time finance director Don Miklus, the highly respected “dean” of municipal finance officers in the state.

It was Don’s belief that Westport would be able to fund at least its initial obligations under the new accounting standards by taking excess funds from our pension plans. By doing this, the impact on taxpayers would be reduced.

As he discussed this with me and others over the months, he assured us repeatedly that he had the issue under control. At no time did he ever suggest the magnitude of the liabilities the town faced. In fact, the actuaries confirmed at the June 16 Board of Finance meeting that they only brought their final report to us in mid-May.

Don’s unfortunate sudden death on Feb. 26 left us scrambling to put together the details of what he had planned. In mid-May our actuaries were able to pin down specifics of our projected obligations.

Along with my department heads, I had worked tirelessly to keep our municipal budget to a 3.9 percent increase. But I knew that to delay making any increased contribution toward retirement benefits until next year would only cost taxpayers more down the road.

Thus the Board of Finance decision to fully fund the retiree health benefits and the May 21 vote to approve a 7 percent tax increase. To say that I was disappointed with this increase would be a massive understatement.

To the Board of Finance members’ credit, they realized the importance of funding these accounts and protecting our triple-A bond rating. One only has to recall the well known private employers and some municipalities that found themselves unable to meet their pension obligations.

Not satisfied, however, with the sudden and unanticipated tax increase, I took the unprecedented step of putting the printing of tax bills on hold. I checked with the state to see if we had time to reconsider the tax rate. Word came back that we could. I then asked the chairman of the Board of Finance to call another special meeting on June 16 to reconsider the rate.

At the special June 16 meeting, I outlined some belt-tightening measures I am imposing, including postponing some capital projects. 

I told the board that these measures, along with anticipated but reduced revenues from the newly extended conveyance tax (home sales are down) and taking more funds from our ample reserves, would not only fully meet our initial retirement obligations but keep the increase to about 5 percent.

Republicans, however, wanted to make a reduced contribution to the retirement account and take less out of our reserves.

While other communities have opted for a phased-in funding method--and I had initially proposed doing the same thing--I came around to agreeing with Democratic members. They had argued that it is less desirable in protecting our coveted credit rating and would result in higher expenditures in the future. By fully funding now, we put the town on the road to saving taxpayers an estimated $30 million in future years.

The difference at the June 16 meeting was by then I had time to find ways to fully fund the obligations without raising taxes so dramatically. By taking the alternate partial funding approach, we would have merely deferred to next year additional “catch-up” increases.

In the end, I suggested a compromise 4.98 tax increase, mid-way between the 4.72 percent Republicans wanted and the 5.25 percent that I had brought forth in my revised proposal. The difference is a mere $27 for the average Westport homeowner-at the expense of higher costs later on.

Contrary to some claims in the press, this process showed how government can successfully manage to meet our long-term liabilities and simultaneously keep taxes under control.

Let’s hope the “permanent campaign” Scott McClellan experienced in Washington does not become the norm for Westport in coming months. What Westport really needs is less political gamesmanship and more serious scrutiny of how we spend taxpayer dollars. Then we all might be able to continue to afford to live in the town we all love.