Submitted by the Democratic Candidates for the BET
Much attention has been given to our town’s debt policy, unnecessarily.
Both parties are, by statute, required to be aligned about debt financing – because no debt can be issued without seven affirmative votes from the twelve-member BET. In other words, the tie-breaking vote doesn’t count. Ultimately, BET members must reach a consensus on debt policy; let’s determine how best to finance assets AFTER we agree to the capital expenditure.
The big issue, of course, is spending; capital projects represent about 20% of our annual budget while operating expenses, 80%. Both parties state they want to keep our mill rate low and maintain our AAA credit rating, a good thing. However, our plan to achieve this differs in important ways.
Democratic BET candidates are concerned with wasteful spending and a lack of risk management. Three important risks we face are inflation risk (particularly related to capital projects), catastrophe risk (particularly related to infrastructure that has exceeded its useful life) and interest rate risk.
First, we need to focus carefully on our operating expenses, since this clearly drives most of our annual budget. Analyzing and debating operating expenses must be a core component of our work. Once we increase our operating expenses, they generally remain a recurring part of our expenditures. Democrats are committed to a robust review of all our operating expenses.
Turning to capital projects we ask the simple question: Would our town be better off had we initiated projects like Central Middle (CMS) and Old Greenwich Schools (OGS) years earlier? Yes, of course! We clearly would have mitigated the three risks outlined above and saved tens of millions of taxpayer dollars in construction and financing costs. We have the power to avoid mistakes like this in the future.
The BET needs to work more collaboratively with the Board of Education (BoE), as well as other town bodies, and anticipate capital expenditures years in advance. Once we identify a capital project, even before we determine its exact specifications and estimated cost we need to anticipate and mitigate the key risk elements associated with potential delay. In April 2018 architectural consultants KG+D issued a comprehensive assessment of all school facilities (The Master Plan) at the request of the BoE. Our infrastructure had deteriorated for years, but at this point it was clear that the Town faced substantial capital expenditures. We should have begun to increase our capital tax levy to address these known future expenditures, to avoid a massive tax bill later.
In the past, the BET reacted to the BoE’s capital requests; in the future we need to anticipate, with a long-term plan that funds capital projects years in advance and prepares for future debt issuance (whatever the term). We need to evaluate the benefits of hedging our interest rate exposure, particularly when rates are low like they were a few years ago. We need to think about debt issuance in a portfolio context, not on a one-off basis.
We have many tools in our toolbox. Let’s use them all to achieve better results for our town: lower costs and lower risk! Finally, and most importantly, by addressing projects proactively, we both mitigate catastrophe risk and give the town the excellent facilities it deserves. With smart planning, everyone wins! Please vote Row A for the exceptionally qualified professionals, each with decades of experience at some of the world’s leading financial institutions.
The Democratic Candidates for the BET,
- Elliot Alchek
- Matt DesChamps
- Scott Kalb
- Leslie Moriarity
- Stephen Selbst
- David Weisbrod