Finance candidates discuss short-term and common bonds
Published 5:26 pm, Wednesday, October 21, 2009
Four men with a gift for numbers, vying for seats on the Board of Finance (BOF), found themselves in agreement Monday when asked if they would support the concept of changing line items in the Board of Education budget. All four said it would be wrong of them to dictate how the school budget should be spent.
Monday's debate at the Fairfield Public Library featured current Board of Finance Chairman Kevin Kiley, a Republican; Kenneth Brachfeld, a Democrat; James Brown, a Republican; and Douglas Jones, a Democrat.
"[The Board of Education members] are the experts," said Kiley. "I would not, as a financial professional, or as an elected Board of Finance member, feel comfortable giving them specific advice what they should do within their budget once it is approved."
Brachfeld said BOF members would be out of their element "to do essentially a line-item veto" to the school budget.
The candidates were also asked if they view the Board of Finance as an appropriation board or whether it should have responsibility of formulating fiscal policy for the town.
Kiley said that's something the board has debated many times.
"I believe that too often the Board of Finance is looked at, or treated as, an appropriations board," said Kiley, "When the true talent from the Board of Finance is the great individuals from both parties. In the 12 years I have been on that board, [they] could add a tremendous amount of value to the town, regarding policy ... on what we think we should bring to the table from a business perspective and what we think our government should look and act like."
He explained that the Board of Finance should be more involved in aspects outside charter limits.
"We need to make improvements there. I would like to see the Board of Finance more involved ... in things like lease negotiations that don't come to us, things like having a natural impact in the negotiations that take place between bargaining units and the administration, for the town side or the board side, that drive between 75 and 80 percent of the budget, the budget line items and the budgeted dollars that we need to fund and I would like to see the Board of Finance have a more active role in those areas, up front, earlier in the process, and I think that begins with better communication and I think it begins with more transparency and I think it begins with our administration."
Jones largely agreed with Kiley, adding that to limit nine tremendously talented people to a situation where all they do is say yes or no is really a waste of the talents of some very engaged and involved people.
An idea Brachfeld proposed was for the Board of Finance to have its own Web site and should be willing to put its priorities on the Web site, and in letters to the editor.
Right now, he said, other than making a couple of little changes on "the margins, there's not much the Board of Finance can do, but the Board of Finance members could agree on some goals and publish them ahead of time to possibly influence what kind of budget is brought to them."
Another question asked of the candidates was: "Do you support short-term bonding of annual operating expenses and if yes, what items or situations are appropriate for short-term bonding?"
Jones began by saying that's a complicated question.
"By and large, I think that the opinion in town is that we have probably bonded more than we should," said Jones. "I think the Board of Finance policy, on the short-term bonding issue, should apply to items that are, as we put it, in the budget non-recurring. There was a point back in the early part of this decade when our interest rates were so low I would joke from time to time and say that maybe we should bond salaries, because we would borrow money for little more than the rate of inflation, but I think that we need to watch our debt service number. ... There's no simple answer to this question but I think we certainly need to watch our short-term bonding particularly and our bonding policy generally. It's basically using your credit card and something we need to be careful of."
Brachfeld said he would be strongly opposed to short-term bonding things like paving roads or purchasing computerized "black boards" for the schools.
"These are all items we should be able to budget for and pay for out of our annual budget decisions," he said. He explained that he is worried about debt service -- the interest the town pays on its debt -- getting too high. The rating agencies, he said, have given Fairfield a AAA rating, "but they've said that the primary reason is because we're a relatively wealthy town, we can raise taxes if we have to to fulfill our obligations."
"That's not the way to run a budget," said Brachfeld. "We want to run a responsible budget that raises the proper amount of taxation and pays our bills and doesn't depend on having Triple A ratings because we can keep going back to the taxpayers for ever-increasing taxes. It's not the right way to do it."
Brachfeld said the town should bond for schools or to build something that will have at least a 20- to 30-year life span.
Brown said it's extremely important for the town to retain its AAA credit rating "because when we do issues bonds, it's in our advantage, we're paying interest on the bonds, the interest rates are low, cause we know that the interest rates are [related to] the cost of the borrowed money." He wouldn't rule out short-term bonding but each situation would have to be reviewed and discussed thoroughly.
Kiley said "absolutely no" for bonding short-term expenses and anything operational. He would not short-term bond anything that can be paid for over two or three years or anything that has a short life span of less than five years.
"We should not be bonding technology at any level because technology becomes out-dated," said Kiley. "Technology's useful life is generally three to five years."
The follow-up question posed to the candidates was, "What is the proper amount of bonded debt for the Town of Fairfield?" This elicited laughs from all before any answers.
Brachfeld, who had to answer first, said he thought the "level of bonding that we have now is probably the correct level, or the maximum level."
"I'll go back to what I said before," said Brachfeld. "We live in a world that is dictated by these rating agencies. They're very powerful. ... If the rating agencies are telling us we're getting our AAA rating not because we have a very low amount of bonds but because we're wealthy enough to continue to raise taxes when necessary to pay those bonds, then by definition we've raised enough money for bonds. We've done a tremendous amount of building over the last ten years or so, not withstanding the middle school issue, which will require some spending and will require some bonding, I would say we don't have that many big projects coming up in front of us and I would be very reluctant to, as a Board of Finance member, more bonding, strictly because we don't want to let that AAA bond rating get in jeopardy and that would happen if we allowed the amount of bonding to get much higher."
Brown, answering the question, said, "They have guidelines and I went through this budget and as it looks right now, the debt per capita is about $3,500 and I know that we're well within the debt ratio that would be recommended."
"What's important is that we use discretion for capital projects," he continued. "What's the investment? What's the return on that investment going to be? Why are we bonding, because we need to keep the credit rating that we have so that when we do have to bond, we're bonding at the lowest interest rates."
Kiley answered, "Our credit level of bonding in the 2009-2010 budget was 26.6 million, which represents a 10.7 percent of our current year budget of $247 million. Those are the figures. I believe, on one hand, those figures, both as a dollar and on the percent of our budget, are well within what the rating agencies like to see a town of our size in ... to keep our AAA rating in good standing. With that said, it's a relatively high number and I do not want to see it go much higher and I would like to see it go down."
The final question of the night a little bit later on, with a suggestion to simply answer yes or no, was "Should we expand property tax abatement for veterans and/or seniors?
The night ended in agreement. Every candidate said yes.