Mayor Testifies at the State in Favor of Stabilization Bonds
New Britain Mayor Erin E. Stewart spoke before the Planning and Development Committee of the State on Wednesday in favor of HB 6684 – in particular Sections 2 and 3 – An Act Concerning Municipalities and Urban Stabilization Bonds.
“It allows flexibility from municipalities when restructuring their debt,” said Stewart. “Right now, we can only issue debt for 20 years , but when you issue for 20 years, your payments are a lot higher. It would issue debt or restructure it for 30 years, we would be able to pay a lot less.”
Next year the City has about $24 million in increases. This legislation would allow the City to lower those payments, but spread them out for more years.
Not all have been in agreement with this.
At a recent Common Council meeting, Ald. Carlo Carlozzi said that this type of practice was kicking the can down the road.
“It (restructuring) would prevent us from eliminating services or raising taxes,” responded Mayor Stewart.
The following are portions of her testimony.
“The fiscal challenges facing our state’s urban centers have been well documented and there has been no shortage of speculation as to the best way to move forward while helping them not only remain solvent, but actually set themselves on a course for future vibrancy and success. While the City of New Britain is in a far different position than, say, the City of Hartford, all our Connecticut cities face common challenges that we embrace on a daily basis. We are the hubs for social services, we are the hubs for justice, we are the hubs for commerce, we are the hubs for transportation, we are the hubs for our most vulnerable populations and we are the hubs that define our respective region’s identities. For those reasons, there is an expectation that we will see to those needs and provide infrastructure and services that will attend to them. While it is a difficult task to be sure, it is a task my fellow urban mayors and I take great pride in and, I believe, we do quite well.”
“As all of you know, these are lean times for government budgets: meaning we all have to find creative and new ways to do more with less. In New Britain, we have spent the past three years trimming whatever fat we can find from our operating budget. We have worked productively with our partners in labor to renegotiate every single union contract and, I’m proud to say, we have had great results. Every bargaining unit has been moved to high-deductible health plans; we have curtailed the practice of post-employment benefits for new hires; and we have reduced mandatory minimum staffing requirements while preserving public safety, just to name a few. These changes will save – and ARE saving us – millions in the next few years. We are making the necessary policy changes to get our City back on track in the long term, and I – like many of my peers – have proven that we have the political will to make the hard choices to continue doing so, but there is one particular area where we need your assistance.”
This bill would “give municipal CEOs another tool in our debt management toolbox. Debt service now represents over 35 percent of New Britain’s budget, much of it paying for debt issued long before I was first elected. Like many of our fellow cities, New Britain has debt service spikes coming soon over the next few years. Since the crash of 2008, we have all seen interest rate levels at historic lows which have caused governments – both municipal and the State alike – to engage in transactions to refund existing debt that was issued at higher rates and take advantage of the new low rates while recouping the savings. But here’s the problem: current statute will not allow a municipality to issue refunding bonds beyond the original final maturity. This severely, and artificially, limits the ability we have to restructure our existing debt to smooth over these debt service spikes and give us time to allow the policy changes we are putting in place to bear fruit. What this bill would do is allow us to refinance our debt – similar to refinancing a mortgage on your home – and lock in today’s historically low rates over 30 years and give us flexibility in managing our debt.”