WEST HAVEN >> Former City Council Finance Chairwoman Nancy Rossi, who just this month announced plans to challengeMayor Ed O’Brien next year, already is blasting O’Brien for his handling of the city’s finances in the wake of news that Moody’s Investors Service downgraded West Haven’s bond rating.
“West Haven now has the absolute worst bond rating of any of the 169 municipalities in Connecticut,” Rossi said, offering an emailed spreadsheet that appears to have originated from Moody’s as evidence. The list, titled “Moody’s Connecticut Local Government Ratings (as of 11/22/2016),” contains a full page of Moody’s disclosures at the bottom.
“Ed O’Brien has not balanced one budget since being elected in 2013,” Rossi said in a news release. “He continues to allow excessive political hiring and reckless spending.
“The Mayor’s policies have led his administration to significantly increase the budget deficit since he took office, has caused the city to receive the lowest bond rating in the state, and has led to the necessity of the city borrowing millions more to correct the deficit,” Rossi said. “This new borrowing will pass the buck to our children and grandchildren for years to come.”
O’Brien responded that Rossi spent years as chairwoman of the council’s Finance Committee, yet did nothing to improve the city’s fiscal situation.
He also said there has been “no excessive political hiring,” the deficit bonding package the council approved to address a $16.5 million deficit “is not stalled” as Rossi claims, and “we are moving in the right direction by everyone’s account except for you and Nancy Rossi.”
Rossi, who works as a certified public accountant, responded that as finance chairwoman, “I absolutely did my best, with one vote ... always to make financially sound decisions.”
But “I was one vote, as he is well aware,” she said. “I did not vote for retroactive pay increases. ... I didn’t vote for the Allingtown (Fire District) takeover.”
If elected mayor, “I think that I would really run this city as a business — like I run my own household,” she said. “That means you don’t spend money that you don’t have. If you don’t have the money, you don’t spend it.
“If I were mayor, I wouldn’t take the car,” she said, citing another example. “I think there are ways of cutting corners and I think it’s absolutely imperative” that West Haven’s mayor take advantage of them, Rossi said.
O’Brien, when he took office in 2013, inherited a $7.77 million cumulative budget deficit. The deficit would have been $10.5 million were it not for a $2.76 million budget surplus left by the administration of former Mayor John Picard, which reduced the overall budget deficit, Rossi said.
“Ed O’Brien is not fiscally responsible, and has crippled the city’s ability to operate and grow,” Rossi said. “The city needs to get its fiscal house in order and balance the budget before it looks to bond the operating deficits — I have been saying that for years.”
She suggested that O’Brien “is going to need to ask the City Council to increase the bonding ordinance to include the FY 15-16 budget deficit, which I anticipate will be significant. We’ll know exactly how large the FY 15-16 deficit is when the annual audit is released, which will hopefully be soon.
“West Haven cannot continue to operate and spend well above its means,” Rossi said. “It’s a recipe for a financial disaster.” She said she also is concerned “over whether there will be a deficit from the FY 16-17 budget. We won’t have that answer before the bonding goes to the open market.” For a more detailed response, O’Brien released an email from Director of Finance Kevin McNabola, who pointed out that while Moody’s lowered the city’s credit rating on $91.5 million in general obligation debt from Baa1 to Baa2 in August, at the same time it revised West Haven’s outlook from “negative” to “stable.”
That change was “based on the approval of the deficit bonding which will help stabilize the city’s cash position and eliminate a longstanding deficit which the city has had since 2005,” McNabola wrote.
Moody’s also changed the outlook to stable “based on the city taking positive steps to restore structural balance by eliminating $3.2 (million) of revenues within the operating budget and recalibrating the operating budget adopting a formal fund balance policy and finally budgeting revenues more conservatively,” he wrote.
McNabola said Moody’s report on the downgrade stated that “the downgrade reflects the negative fund balance which the city has carried since 2005, so essentially the entire term of the Picard Administration. It also states that the city has taken positive steps to improve the financial position of the city but has been challenged by negative pressure on healthcare claims and special education expenditures, which have driven the deficit for that last 2 years.”
He said the $2.7 million surplus that Rossi referred to from Picard’s administration “is driven by all one-time revenues within Intergovernmental Revenues, which includes state payments-in-lieu-of-taxes, or PILOT, which the State changed the calculation on in 2013.”
He listed a number of fiscal improvements made over the past three years that O’Brien has been mayor, including eliminating $3.2 million in one-time revenues from the operating budget, implementing a “true tax-collection rate” by lowering it from 98.7 percent to 98.5 percent, based on a three-year trend of a true actual tax-collection rate, and implementing advanced tax collections in early June to strengthen the city’s cash-flow position.
McNabola said the city also restructured its health insurance to save $900,000, saved $1.9 million by not funding seven positions in the current budget and took steps to fund the annual required contribution on the police pension, which was being funded at $1.2 million and is now being funded at $1.9 million.
West Haven also saved $623,588 on electricity costs by extending the city’s electricity contract, he wrote.