Pension Transfers Nixed

In a series of eleventh-hour votes that took place well past the eleventh hour, the Hamden Legislative Council rejected most of a series of transfers that would have diverted almost $2.5 million budgeted for the town’s pension fund to pay other bills.

At around 12:30 a.m. Tuesday, eyes bleary from five and a half hours of discussion on various issues, council members approved only two of the 13 transfers Mayor Curt Leng’s administration had submitted to cover overages in the current budget.

The fire department got the $275,000 it had asked for in transfers to pay for two different overtime accounts, but no other department got what it had requested.

The council voted not to transfer funds into accounts for natural gas ($100,000), water ($101,000), electricity ($150,000), street lighting ($183,500), police overtime ($300,000), police extra duty ($50,000), public works tipping fees ($515,500), the CMERS pension plan ($250,000), town attorney expenses ($150,000), and workers’ compensation ($396,370). In total, the administration had requested $2.47 million in transfers.

“I’ve been saying for over a year that I will not underfund the pension at all,” said Majority Leader Cory O’Brien. ​“This has been said to the mayor numerous times.” He said that his opposition to the transfers should not have come as a surprise to anyone.

Leng said the proposed transfers’ failure was indeed a surprise.

“I was surprised the transfer didn’t pass in committee, and it appears silly season may be here early,” he stated. ​“We have governing to do and essential services our residents count on. Line-item budget transfers occur every year, in every government.”

The transfer failed to pass the council’s Finance Committee, with opposition from O’Brien, At-Large Rep. Lauren Garrett, District 2 Rep. Harry Gagliardi, and District 4 Rep Eric Annes, though only for procedural reasons. District 8 Rep. Jim Pascarella and Minority Leader Marjorie Bonadies supported it.

Annes supported the motion, but he voted no so he could be on the prevailing side of the vote in committee, allowing him to reintroduce the motion to the whole council later. Had he voted yes, it would still have failed.

Once the council had finished all of the business on its agenda Monday night, Annes made a last-ditch attempt to bring the transfers back, introducing each one individually to the floor of the whole council. Adding a motion to the agenda requires a vote of two-thirds, and only the two fire department transfers could garner the eight votes necessary to even be introduced to the floor.

While the council struck down the transfers, department heads looked on from the audience, wondering how they will pay for the expenses in their departments.

Four of the failed transfers would cover utilities. As O’Brien told the council, he had found out through a Freedom of Information Act request that the town currently has 26 overdue bills. As a result of the council’s vote, those bills will have to wait even longer before the town can pay them.

“Hello? I Can’t Come Up With $2M”

Hamden Deputy Finance Director Rick Galarza told the Independent that he has negotiated a month-long extension with most of the utilities, and he is not worried that they will shut off any services. The only account he has concerns about, he said, is for street lighting.

He said that there is nowhere else in the budget that the money for those accounts can be transferred from.

“That’s a big number,” he said; “$2 million sitting around? Hello? … You can take from here, you can take from there. I can’t come up with $2 million.”

For now, most of the other departments affected appear to be able to cope. Public Works Director Craig Cesare told the Independent his department will be fine for the time being, but that next month the lack of funds would become a problem. His department has been hit particularly hard this year because recycling now costs $55 per ton to get rid of, while it cost nothing last year.

Leng said that he had asked Galarza to assess every department, and that he will sign a few smaller transfers on Wednesday that are within his power to carry out. ​“We will make every effort to responsibly pay bills due and ensure continuation of essential service, while hoping that the Town Council reconsiders the overall transfer at one of their upcoming meetings,” he said.

Another Pension Battle

Though Annes tried to get the transfers back on the agenda, he said he too has mixed feelings about transferring money away from the pension.

“There are members of the council who are concerned about the fiscal health of the town and the mayor not necessarily fully acknowledging the problem and taking necessary actions to address it the best way possible,” he told the Independent. He said he shares many of those concerns, but ​“we have an obligation to fund commitments made that are of immediate concern.”

Those long-term problems are the reason that O’Brien, Garrett, Gagliardi, and other council members have, and continue, to oppose pension transfers.

“If he is underfunding the pension, he is increasing the debt balance of the town,” said O’Brien, referring to Leng. ​“That is going to result in a tax increase.”

He said that transferring from the pension line in the budget is a form of borrowing money because it simply pushes back pension obligations that the town will have to pay in the future.

“If you’re borrowing money, be honest about the fact that you’re borrowing money,” he said.

For decades, councils in Hamden did not put enough money into the town’s pension until the fund was close to dry and the town had to float a $125 million pension obligation bond to pay its pensioners. As a result, the town had to ramp up payments into the fund every year until it reaches its actuarially required contribution (ARC), the amount the state says it needs to pay each year to be fully on track.

The town was supposed to pay 100 percent of ARC in 2018, around $23 million. When state revenues came in around $5 million less than the town had expected, the General Assembly passed legislation that gave Hamden a break, stretching out the ramp-up period before it needs to pay its full ARC.

The budget that the council approved for the 2018 – 2019 fiscal year fully funded the ARC at around $22 million, even though the state, due to last year’s bill, requires the town to pay only 70 percent of ARC. So far, the town has paid that 70 percent, meeting the state’s requirement and allowing it to use funds originally intended to feed the pension to cover other expenses instead.

Monday’s vote was another instance in a series of battles in which O’Brien and other council members have taken a stand against withholding funds from the pension to cover operating expenses. He and others opposed a similar transfer package on April 18, and spoke out against the practice at a meeting in December as well.

O’Brien said these transfers could have been predicted, because the mayor’s budget ​“already has a known deficit every year.” He and Garrett have argued that the mayor’s budget included revenue projections that were too high and cost projections that were too low.

“My issue is … that nothing was done previously to cut costs,” said Garrett. ​“Back in October we knew this was going to happen, and the mayor did nothing about it.”

Leng told the Independent that at the beginning of the fiscal year, he implemented a ​“hiring freeze/cut back” that saved the town around $500,000.

Some council members said that, despite what their colleagues say about how the budget was crafted, the council still had a responsibility to fund the town Monday evening.

“What happened in the past is the past,” said Pascarella. ​“We have a legal obligation to fulfill” in funding town departments.

Bonadies, the council’s minority leader, argued that ​“we need to fund these departments. This is purely political.” She said that a primary campaign was being conducted on the floor of the council, referring to the fact that Garrett has filed papers to challenge Leng for the Democratic nomination for mayor.

O’Brien said that you can’t talk about the transfer package in isolation. ​“When everyone wants to focus in and narrow in on one particular bill … my argument is always no, you need to take a step back and it needs to be the entire budget that you focus on.”

Leng said that, in the context of the whole budget, the transfer sought on Monday was relatively minor. It totaled around 1 percent of the total budget.

“To put it in perspective,” he wrote, ​“if you or I budgeted $200 for work on our car and found we needed more motor oil than windshield wiper fluid, you would take $2 of the $200 to pay for what’s really needed. Seems to me that most people would make sure they were paying what was most needed at that time to cover the expense. That is what a 1 percent change looks like.”

For O’Brien, Garrett, Gagliardi, and other members of the council, that 1 percent change was not acceptable if it meant continuing to not put money into the pension.

“If you keep coming to the cookie jar, at some point you’re going to get your hand slapped,” said Garrett.