“Third Time The Charm,” As Pension Transfers Pass

The Hamden Legislative Council finally voted Monday evening to transfer of $2 million allocated for the town’s pension fund to pay for utility bills and other expense overages, after twice voting down the plan.

Monday’s transfers total $1,868,170. Of that, $100,000 will pay for natural gas, $22,800 for water, $150,000 for electricity, $183,500 for street lighting, $225,000 for police overtime, $25,000 for police extra duty, $515,500 for public works tipping fees, $250,000 for the state’s CMERS pension plan, and $396,370 for workers’ compensation.

The transfers have met with staunch opposition since Mayor Curt Leng’s administration submitted them in March. Monday evening was the third time the full package came before the council.

“It appears the third time was the charm,” said District‑8 Rep. Jim Pascarella, who has supported the transfers each time they have been presented to the council.

Many council members said they opposed the transfers because they voted to fully fund the pension this year, and they were not going to renege on that commitment.

“We’re in the situation we’re in because for my entire life this town and the entire government representing it have not funded the pension,” said District‑9 Rep. Brad Macdowall.

For decades, councils and mayors in Hamden did not pay enough money into the pension fund. In 2014, the town took out a $125 million pension obligation bond because the fund was getting dangerously low. The bond obligated the town to ramp up its pension payments over the course of a few years until it begins to pay its actuarially required contribution (ARC), the amount the state recommends that the town pay to be on track to fully funding the pension. Hamden has not yet paid its full ARC. As of July 2018, Hamden had funded 36 percent of its $458 million in total pension liabilities.

Even some of those who voted yes on the transfers Monday so that contractual obligations could be paid said they were very unhappy about doing so.

“Many of us voted for the budget because it fully funded the pension,” said District 4 Rep. Eric Annes, adding that the council raised the mill rate to do so. Now, he said, ​“the worst-case scenario has happened where we have raised the mill rate and still haven’t funded the pension.”

Yet Annes, like nine of the 14 council members present, voted to approve the transfers because, as many said, there was no other option and the town needs to pay its bills.

“All the bills are mandatory and we must pay them,” said Council President Mick McGarry (pictured). ​“Yes, we should plan for the future better … but we are where we are and we have to pay the bills.” He added: ​“they’re not going to turn off the pension, but they will turn off our street lights.”

Some members of the council, said they consider the pension one of those mandatory bills.

“We need to pay our bills,” said Majority Leader Cory O’Brien, ​“but this vote is not paying the most important bill in this town.”

$5 – 6 Million Anticipated Short On Revenues

A protracted and highly contentious series of votes led up to the transfer package’s passage on Monday. Though Leng (pictured) submitted the package in March, no part of it came to a vote until a special meeting on April 18, which some council members said had caught them by surprise. The transfers did not come before the council until then, said O’Brien, because members of the council had requested more information from the administration about whether those transfers would be the last of the fiscal year from the pension account.

On April 18, the council passed only part of the $300,000 transfer package presented to it, which included fire department salaries. The rest failed.

The administration then rolled those transfers into another package, which it submitted for the May 6 council meeting. It totaled $2.47 million. Again, only transfers to pay for fire department salaries passed.

On May 20, the council again failed the transfer package, this time adjusted down to $2.1 million, though it did pass $150,000 for attorney’s office fees.

On May 24, Leng declared a public emergency to transfer around $76,000 from the finance department’s salaries to pay the water will at the Laurel View Golf Course.

And the saga may not be over. On Monday, Annes asked Deputy Finance Director Rick Galarza whether he thinks there will need to be more transfers from the pension account.

“That’s really an administrative decision,” Galarza replied. ​“Right now we’ve paid our legal obligation.”

This year, the state required that Hamden pay 70 percent of its $22.6 million ARC, though the council voted last year to pay 100 percent of ARC in the 2018 – 2019 fiscal year. So far this year, said Galarza, the town has paid around $16 million into the pension fund, which amounts to 71.5 percent of ARC, meeting the state’s requirement.

That leaves around $6.3 million in the account that was designated for payment into the pension.

Annes phrased his question in a different way. Are you expecting to the pay that $6 million into the pension? he asked.

“I would say probably not,” replied Galarza. It ​“could be used to offset revenues” that come in under what was budgeted, he said, or for other expense accounts that go over budget.

Annes (pictured) narrowed in on the revenues. How far behind is the town? he asked.

Galarza replied: about 2 – 3 percent of the budget, or $5 – 6 million.

Just to clarify, Annes repeated back what Galarza had said: ​“the revenues from last year’s budget were $5 – 6 million overestimated?”

“Yes,” Galarza replied. He added that it’s still possible, however, for the town to realize some of those revenues in the remaining month before the end of the fiscal year.

One area the town is still short, he said, is the $1.35 million gift from Quinnipiac. He said the university has not given the town anything yet, but that the administration is in talks with the university.

Another revenue line coming up short, he said, is police extra duty (when contractors pay the town to have police present at construction or at an event). That line, he said, is currently around half a million dollars under.

The paramedic assistance revenue line in the fire department, he said, is under by around $300,000. Building permit revenues are under by $1 million. The budget also anticipated $500,000 from an out-of-state motor vehicle tax that is not yet up and running.

After hearing that list, O’Brien said that he sees a lot of similarities between the revenue lines that Galarza had just listed and those that the council voted to adjust in its budget process this year to reflect what many felt were more realistic estimates. Leng has vetoed the council’s amended budget, and the council will vote on Monday on a veto override.

“If the mayor’s budget goes into effect, we will be in the same position next year” with revenue shortfalls, said O’Brien. If O’Brien is correct, using money allocated for the pension to cover those shortfalls will not be an option, as both the mayor’s recommended budget and the council’s amended budget fund the pension at the state-required 80 percent of ARC.

In a statement to the Independent Monday evening, Leng said that the administration will work hard to compensate for a revenue shortfall.

“While I have heard wild and factually inaccurate statements alleging a deficit in the current year budget of in excess of $10 million, I can assure you this is not reality,” he wrote. ​“It is simply not based in fact. Our Dep. Finance Director tonight even spoke of a $5 – 6 million ​‘revenue shortfall,’ but what our residents need to know is that this only represents one side of the budget and that we will triple our efforts to continue collecting revenue, but also holding back on expenses every single day, with the goal of balancing the Town budget. This is what is in the best interest of the Town and our taxpayers.”