OpEd: Right Projects, Right Financing
The Board of Estimate and Taxation (BET) has a long-standing practice of borrowing money for short maturities for our town’s capital improvements. This practice has kept taxes and debt manageable, a success for every resident. In contrast, a few voices are calling for increasing the borrowing term to the life of the capital project – in other words, moving from our successful “modified pay-as-you- go” method of financing to longer term borrowing. Our new governor recently declared that the sensible policy for Connecticut is a “debt diet” of less borrowing, not more. Let’s explore the myths and facts of Greenwich’s borrowings:
Myth One– The Town of Greenwich has “kicked the can down the road” when it comes to maintenance of our schools.
Facts– Over the last decade, the Town of Greenwich has invested a half billion dollars in our schools and continues to invest the majorityof our capital budget in the schools. Over the past fifty years not one requested major capital project has been turned down for our schools.The Board of Education prioritizes and requests capital projects which the BET considers in each fiscal year budget. Past priorities for the high school included funding a new science wing, reconfiguration of the media center to accommodate an additional House, and the $46 million Performing Arts Center and new classrooms. In 1990, after the Cos Cob School fire, the school was entirely rebuilt while keeping the historic exterior. Since 2000, new schools were built at Hamilton Avenue, Glenville, and New Lebanon.
In this year’s budget, the BET Budget Committee’s recommendation to the full BET includes planning money for capital improvements for two schools, Greenwich High School and Julian Curtis (out of four requested) and monies for seating as a start to the new Cardinal Stadium. The $17 million budgeted by the BOE for Cardinal Stadium appears to indicate it is a higher priority over the infrastructure of some of our schools. A plan by KG+D consultants aggressively calls for $750 million in capital over 15 years. The fact is that many agree and have voiced the belief that this plan will likely take 20 years or more. Why? Because neither the town nor the BOE have the processes or systems in place or the ability to manage these projects simultaneously at all our educational sites.
Myth Two – The Town of Greenwich has spent $15 million per year when it should be spending $20 million a year on our schools.
Facts –Instead of worrying that Greenwich is “not spending enough” we should be discussing questions about the outside consultant’s report, such as “How was the $20 million per year figure from KG+D derived?” and “Were the numerous interim appropriations (outside the annual budget process) or new schools (outside the BOE budget) included in their calculation?” Additionally, our dialogue needs to acknowledge that numerous studies have shown buildings don’t produce educational outcomes, but exceptional curriculums and properly trained teachers do.
Myth Three – Greenwich should bond 20 years for the school projects since it will be more beneficial to the taxpayer
Facts –Not surprisingly, the town has used 20 year borrowing where there is a connected revenue stream, including sewers and the Nathaniel Witherell which matched the State’s reimbursement through an increased Medicaid rate over twenty years. But this is not the norm for good reason. For example, in acquiring the Pomerance property, the “modified pay-as-you-go” payment plan enabled our town to refinance the later installments of the $22 million purchase price in the municipal bond market, while preserving the original short five-year maturity. The savings to taxpayers were substantial – $1,000,000. The Town’s seven-year modified pay-as-you-go financing scheme has allowed the town to finance large capital expenditures without financially burdening future generations. In the long run, shorter maturities and careful budgeting saves money for our taxpayers, something long term borrowing won’t do. Importantly, today’s taxpayers are not facing the financial burden of debt service from those who preceded us.
We recognize the benefits of the town’s practice of short maturities, modest debts and lower taxes. We don’t need a new financing structure, including up to twenty-year financing. We will continue to adapt our financing maturities to the town’s real needs. Most of us in our daily lives do not live beyond our means. That same principle should govern and has governed how we finance our town projects – after all, careful planning and management of our town finances is one reason we are the envy of other towns in Connecticut.
Republican BET Members
Michael Mason (Caucus Chair)