Hamden's Mayor, Scott Jackson, wants to issue pension obligation bonds this year. This is not in the best interests of the taxpayers and would represent a total capitulation to the unions. The Town Council will consider this proposal in the next few weeks. The mayor's idea must be rejected. The recent actuarial study determined that Hamden’s pension shortfall is $360 million, present-value dollars. That deficit represents an astounding $6,000 for every man, woman and child in the town. It is nearly twice as much per capita as Stockton, California, which is now in bankruptcy court.
The actuaries identified several reasonable ways to reduce pension costs. The mayor is not pursuing those. Any financial solution must be accompanied by large liability reductions for the plan burden to be manageable.
Fitch, the bond-rating agency, just downgraded Hamden again. Bonding now would be very expensive. Even if investment returns exceed bonding cost, all the debt service and all the risk would fall on Hamden taxpayers.
Once pension bonds are issued, state law requires automatic, actuarially determined, payments into the fund. If bonds are issued without union concessions the town will be locked into high payments forever. There would be no way to cut costs other than massive layoffs or bankruptcy. Nobody wants to see those happen.
Pension contracts with the town will not be on the table for two years. Therefore any bonding decision should be deferred until those negotiations are complete.
Issuing bonds this year would not be in the public interest and a betrayal of our trust. The public and the council should tell the mayor that pension reform must happen before bonding is considered. If bonding were enacted now it would be a crippling blow to Hamden taxes and property values for generations.
George Levinson
Hamden