Slifka's State Of The Town Address

Obama had his State of the Union; Slifka had his State of the Town.
Thank goodness West Hartford's Mayor is no Barack Obama.
At least this Democrat, Slifka, has some vision that includes fiscal responsibility and business growth.

West Hartford News reported that Slifka spoke about "controlled spending, the second-coming of Blue Back Square and a commuter rail to mark West Hartford as the new regional hub of the state .... by the year 2020".

Slifka addressed about 40 members of the West Hartford Chamber of Commerce on Jan. 26, and he outlined his ideas to take West Hartford through tough economic times and continue its progress.

"The state of our town is strong, but we are operating in a highly dysfunctional environment"

Last year, the town worked through a $10 million deficit while losing $6 million in revenue. We can all remember that some services. like leaf collection, took a hit - but all in all we didn't close any libraries or pools or firehouses. This year might bode differently, as we now face a $12.5 million deficit, due to lower revenues and less money coming from the State, along with higher expenses in the area of employee benefits, as well as other items in the budget. The West Hartford Taxpayers Association recently posted the Town forecast up on their website. The report was created by Town management.

Mayor Slifka spoke about the strength of business in town, and that:

"We're now known as an entertainment and dining destination,"

Slifka shared his plans for West Hartford's future in four parts: the budget, entrepreneurial regionalism, development and transportation.

"We are going to continue our focus on controlling spending," Slifka said. West Hartford wants to avoid the "GM Problem," he said, meaning a circumstance in which a company starts to fail because it had to pay for pension and health benefits for all its retired employees. "It was no longer focused on producing its product, but instead trying to figure out a way to pay out benefits," said Slifka. The town provides a service too, and the people in the community are investors who look for low taxes, good housing and education for their families, Slifka said.

To reduce the growing pension liability for the town, which Slifka said this year increased $2.5 million from $7.5 to $10 million, the town has switched from a defined benefit plan to a defined contribution plan. The Security Union and the West Hartford Public School Nurses Association have recently had their pension and health insurance benefits renegotiated under the new defined contribution plan, where the town matches a certain amount of money into an employee's 403(b) or 457 plan.

With regard to Entrepreneurial Regionalism, the Mayor very wisely did not endorse state-mandated regionalism. He did not seem to want to get involved in sharing costs and services between towns, or having town services performed by a regional organization. Instead, Slifka felt that we can achieve the best results by having the town perform services itself. He stated that services like payroll, information technology and engineering, can be done on our own and without state assistance.

The Mayor also outlined some ideas for further development of business in town, including building a hotel on the Raymond Road and Farmington Ave. (Well, that's been talked about like forever)

The Mayor also voiced his support for the rail line which would link Connecticut to major metropolitan areas like Boston and New York and which would make our town the new regional hub of the state. Slifka believes that establishing a commuter rail out of Elmwood would spur growth in and around the area - especially given that we have so many residents who work in those metropolitan areas and already commute.

As an interesting side-note Mayor Slifka, also stated that he was ruling out any possibility of running for higher office.

"I don't want anyone in town to be distracted," Slifka said of all the work that the town has ahead of it. "Most people forget I'm a volunteer."

All in all, Mayor Slifka seems to have fiscal constraint and business development foremost in his mind, and in good or bad economic times that's a very good thing for West Hartford. Now let's see what he can do to get the Town Council, and most especially the Board of Education, to get on board with fiscal constraint.

Unfunded State Mandates Choking Municipalities

The Connecticut Council of Municipalities put out a report citing the costs of unfunded State mandates to local municipalities and ultimately the taxpayer.

It's quite startling.
CCM is begging for relief from the State Legislature as we head into this next budget cycle for cities and towns across CT.

Everything from Juvenile Justice mandates to Charter School Special Education to Health Insurance Coverage. That and much much more..

Maybe some municipalities across Connecticut will say "NO" and just not comply.
Some things they just don't have the money for.

Once upon a time, back in Jan 2009, the Office of Legislative Research also did a study about the costs of unfunded mandates in education ... here it is. It featured a huge long laundry list of "have to haves", at the cost of the local taxpayer of course. This list excludes mandates that apply only (1) to certain school types of districts, such as priority school districts, or (2) as a condition of receiving a state grant for a particular educational program.

How can we ever thank our state delegation Sen. Harris, Rep. Bye, Rep. McCluskey, and Rep. Fleischmann for all they have helped to bestow upon the taxpayers of West Hartford? Perhaps we should find a way to reciprocate in November....

West Hartford Tackles Pensions

"The question isn't at what age I want to retire, it's at what income." — George Foreman


The Hartford Courant recently reported a story about changes happening in West Hartford and other municipalities about how pensions are being looked at and what changes we may see in their administration.

Spiraling and unsustainable pension costs are beginning to take their toll on town budgets across the state, and across the country (States are also suffering). Town managers and bargaining units are beginning to make some changes and some of the smaller unions are beginning to accept changes that will ultimately set the precedent and have to be taken on by the larger unions as well. It's a reality that has already become the norm in the private sector, and that is the switch from defined pension benefits to a defined contribution plan.

"Future pension obligations are huge issues for West Hartford and other municipalities," Town Manager Ronald Van Winkle said. "The change in the ... contract with school security guards is a change we are making a priority in talks with other union members."

A pension system that pays retirees a guaranteed monthly amount puts pressure on a town, officials say, especially when a falling economy erodes investments that pay those pensions.

...local obligations increase over time as workers retire at higher levels of pay. A decade ago, West Hartford's pending pension obligations were $13 million. Now, officials say, the figure is closer to $25 million.

It's a looming expense that West Hartford and other Connecticut municipalities are trying to retreat from, like deer running from an advancing forest fire.

As West Hartford budgets have come increasingly under scrutiny, even by members of the community, some with extensive business background, it has become quite clear that the way we do contract negotiations and the way in which we structure pensions has got to change. We have in part, had to give up some town services in order to fund and pay for employee pensions. There comes a time when there just is no more to cut from town services without affecting the quality of life, and we can no longer merely raise taxes to compensate for higher costs in current salaries as well as pay for pension benefits. As it stands, our pension funds have been underfunded for a variety of reasons, one of which is a poorer market performance yielding lower fund income. This creates an incredible liability for the town, as taxpayers have to make up the shortfall.

But changes in the way pensions are determined and administered are nothing new.

The changes sought by local government echo changes that American businesses began making in the 1980s. In 2006, almost 80 percent of state and local workers nationwide aged 25 to 64 were covered by a pension, compared with only 45 percent in the private sector, according to data from Boston College.

And 80 percent of those public sector workers with retirement coverage had a defined benefit plan. In private industry, "more than 60 percent of [pension] participants [are in a] defined contribution plan," according to the Center for Retirement Research.

So far, 28 of the state's 169 municipalities have some version of less-expensive 401(k)-type plans for workers, instead of increasingly costly traditional pensions, according to information town Finance Director Chris Johnson said he got from the Connecticut Conference of Municipalities.

Indeed, many municipalities across the country are dealing with the same issue as they struggle with unfunded mandates and shrinking state funding. Connecticut municipalities are beginning to catch on to the switch that the private sector has already embraced for the past 30 years.

Avon was among the first, switching in 1997 from defined pension benefits to a defined contribution plan for all new hires. Currently, 25 percent of the town's workforce is on the old system, and 75 percent is in the new plan.

"Really, it's a generational change," said Bill Vernile, the town's director of human resources. "The town contribution in the new system is a third of the cost of the defined benefit. Our employees contribute 7.5 percent of their pay, and the town matches that. Our expenses are predictable."

Manchester has worked since 2000 to move its employees into defined contributions plans. Some unions have agreed, but not all. Alan Desmarais, the town's finance director, said municipalities statewide are trying to change retirement plans "so the town doesn't have to deal with pensions, and costs are lower and predictable."

The city of New Haven has nine open contracts this year and will "try to make the move into defined contribution plans," said Craig Manemeit, the city's director of labor relations. "We're looking to get out of the pension business and out of uncharted fiscal territory."

In West Hartford, the 15-member guard union's contract — up for a school board vote on Tuesday — bars any new guard hired from enrolling in the increasingly costly defined-benefit pension system.

Instead, new guards will be covered by a less-expensive 401(k)-type plan that could trim town liability by at least 60 percent, makes costs predictable and shifts the investment risk to employees. Guards already in the defined-benefit plan will stay in it.

Other bargaining units up for contract renegotiation should take note and realize that the handwriting is on the wall. There are 10 contracts up for negotiation this year in West Hartford and there is no doubt that pension funding is going to be a major point for the town. With towns like West Hartford currently holding all the risk on pension plans, and revenue streams becoming more difficult, the time has come for unions to realize that the current way of doing business is simply unsustainable. Retirement plans will have to be amended if municipalities are to stay solvent and simultaneously provide for the needs of its citizens.

Additionally, it would appear that the practice of double and triple dipping needs to be addressed. West Hartford currently has two former Town Managers and a Superintendent of schools who "retired" with six figure pensions and who have now moved on to work in other communities making six digit salaries doing similar jobs that they did for West Hartford! And while that may be legal, and it may be what they bargained for and were given, it is certainly not what we can continue to negotiate.

Furthermore, the pension fund that we currently have had not been adequately funded over the years, and that occurred for a few reasons as explained below. That certainly needs to be addressed to make sure that we don't get into a similar situation, or continue on in like manner. Here's a snippet from a Town Council meeting in April 2008 when Mayor Slifka explained why we were $6 million in the hole for pensions:

Until about 2001, we had a 12-year pension holiday, meaning that the town did not contribute money to the pension fund. Why they were able to do that during that time is because for a long period the town had more employees paying into the pension fund than there were retirees to whom we were paying out. That reached a…the shift happened roughly in 2001 at the same time, that was when the stock market dipped, especially following 911 and all of a sudden we were left…we were overfunded in the pension at that point, and we went to being underfunded at that point, which meant we started having to fill that gap immediately. That was the very first budget I worked on and that has been an item that continues to be difficult to deal with. One of the quick ways that you can become one of those municipalities you don’t want to be that gets labeled as being irresponsible is to not fully fund your pension and also your…in these days, the newer item is your healthcare reserves. This year that item is on the pension is 6 million dollars.

Pension negotiation and administration ... it's the next item in municipal spending that truly needs an overhaul. It certainly looks like the time has truly come to accomplish that.