PROMISES, PROMISES, ... WHEN PROMISES ARE JUST HOLLOW WORDS!

GASB 

~PRONOUNCED~

GASP 45 TIMES!

WELL ITS THE SEASON, NO NOT XMAS RATHER FINANCIAL HOLLOWEEN!

THE TOWN OF NEW FAIRFIELD PRESENTLY HAS A $9,000,000 PLUS LIABILITY THAT IS UNFUNDED.  SURPRISED?

WHAT WILL BE THE OFFICIAL RESPONSE?

What has been the growth rate of these post-employment benefits (OPEB) ($9 plus million) over the last 10 years?

What growth rate in the tax base is necessary to handle this liability?

What growth in the residential building of the Town is necessary to off-set the impact the mill rate?

What impact on the mill rate is necessary to address this liability?

Why isn't this liability on the Town's Financial Statements?

What is the impact of this liability on each taxable residential property?

FEELING BETTER YET?

IF THESE QUESTIONS REMAIN UNANSWERED THEN YOU HAVE YOUR HEAD IN THE SAND!

PROMISES, PROMISES OF GASB 45 ...

 or GASB Statement 45, is an accounting and financial reporting provision requiring government employers to measure and report theliabilities associated with other (than pension) postemployment benefits (or OPEB). Reported OPEBs may include post-retirement medical, pharmacy, dental, vision, life, long-term disability and long-term care benefits that are not associated with a pension plan. Government employers required to comply with GASB 45 include all states, towns, education boards, water districts, mosquito districts, public schools and all other government entities that offer OPEB and report under GASB.

GASB 45 was instigated by the Governmental Accounting Standards Board (GASB) in July 2004 because of the growing concern over the potential magnitude of government employer obligations for post-employment benefits. GASB 45 will:

1. Recognize the cost of OPEB benefits in the period when services are received.
2. Provide information about the actuarial liabilities for the promised benefits.
3. Provide information useful in assessing potential demands on future cash flows.

GASB 45 applies to the financial statements issued by government employers that offer OPEB and that are subject to GASB accounting standards. GASB 45 does not apply to private employers or trusts that are established in order to pre-fund OPEB benefits and for trusts that are used as conduits to pay OPEB benefits.

WHY IS GASB DOING THIS?

GASB along with the various bond-rating agencies has become concerned that governmental entities are not accounting for the future benefits that they have promised.  Given the very rich benefits offered by various entities, it may impact their ability to meet their bond obligations in the future or will saddle future taxpayers with significant costs for today’s promises.

WHAT SHOULD WE DO NOW?

Recognizing that unlike Corporate America, these plans are unlikely to face wholesale elimination, you may wish to determine your liabilities prior to the effective date and make design changes to mitigate the impact.  At the least, it will allow you to see the value of the promises to ensure that you are aware of the obligations during negotiations.

While, there is no statutory obligation (YET) to pre-fund these benefits (liabilities) like an organization would with their pension promises.  However, there are significant advantages not to mention the moral obligation to recognize the liabilities on the balance sheet of the town and in doing so in terms of being able to utilize higher discount rates and therefore, report lower liabilities, unless 'we' continue to keep our heads in the sand!

UNFUNDED LIABILITY

There are three basic ways of treating unfunded liabilities:

1. establish and fund an irrevocable trust
2. pay-as-you-go
3. setting aside a dedicated reserve

WATCH THESE TWO VIDEO'S THEN CONSIDER YOUR RESPONSE!

THE YELLOW BRICK ROAD ... IS PAVED WITH DEBT

Per Capita Debt comparative all 50 states ...

The information in the tables is calculated from data published by the U. S. Census Bureau (state debt outstanding at the end of the 2007 fiscal year and estimated state populations as of July 1, 2007) and the Bureau of Economic Analysis (state personal income for 2007).

State Debt Per Capita, 2007
Connecticut 6,830 - Ranked 4th. in the nation
State Debt as a Percent of Personal Income, 2007
Connecticut 12.13% - Ranked 8th. in the nation

The issue revolves around the state's current revenue problem is how have these values (per capita and percentage of personal income) changed and what impact on PILOT Funds and other revenue distributions to the cities and towns will this have. Further issues center around distributions from the Federal Government to the state which have direct impact on revenue and debt policy, bonding, grants and reimbursements. The following video frames these issues from another perspective.

The current budget process of the BOF should be sensitive to these issues. Setting priorities, plans and allocation of funds is a very difficult process. in present economic times transparency is essential in is financial process.  An interesting exercise for New Fairfield would be a similar analysis ... or perhaps 'debt per home' to put into perspective the debt that must be retired from the major tax revenue source of the town.

Global Warming Dead-Enders Imitate Gilligan's Island

Decades after Japan surrendered to conclude World War II, legend persisted of abandoned Japanese soldiers scattered across the Pacific, fighting a war they’d already lost. 

This week, desperate global warming alarmists did a brilliant imitation amid record winter storms. 

The legend of fanatical Japanese dead-enders actually had a basis in fact, including the March 1974 surrender of Lt. Hiroo Onoda from Lubang Island in the Philippines.  Lieutenant Onoda tenaciously refused to come out of hiding until Japanese authorities literally brought his former commanding officer to order his surrender. 

Incidents such as that became so ingrained within American folklore that they even served as the basis of a humorousGilligan’s Island episode in 1964.  Entitled So Sorry, My Island Now, Vito Scotti played a Japanese sailor unaware of the war’s end, who captured the castaways until the bumbling Gilligan ultimately rescued them. 

Today, the dejected cult of global warming dead-enders increasingly resembles the fanatical Japanese sailor of that episode, fighting a futile battle. 

After all, an entire decade of climate data has undermined the global warming movement, including temperature declines since 1998 despite rapid industrialization in China, India and other developing nations.  Further, the embarrassing recent “Climategate” scandal has exposed the fraud of climate scientists who violated British law by concealing data, sabotaged the careers of scientists who disputed their claims and targeted scholarly journals that contradicted the global warming orthodoxy.  And last month, a United Nations claim that the Himalayan glaciers could melt by 2035 itself evaporated when the researcher behind it admitted that it was completely concocted. 

To top it off this week, the entire world witnessed a record snowstorm that utterly paralyzed Washington, D.C. 

In the span of four days, two separate storms named “Snowmageddon” by not-so-affectionate D.C. residents dumped over three feet of snow on the capital.  These storms followed December’s original “Snowmageddon,” whose icepacks still hadn’t completely melted away.  Collectively, this winter’s D.C. snowfall reached a record 54.9 inches, thereby surpassing the record set over a century ago when the winter of 1898-99 witnessed 54.4 inches. 

In the face of this inconvenient truth, Al Gore, the disgraced Emperor Hirohito of the global warming hysteria movement, disappeared rather than face the heat, so to speak. 

Like the scattered Japanese soldiers, however, Gore’s loyal minions continued their fanatical fight. 

Take Robert F. Kennedy, Jr., for instance. 

In a Los Angeles Times commentary dated September 24, 2008, just over one year ago, Kennedy alleged that man-made global warming has changed the climate so dramatically that winter snow has almost disappeared from the D.C. area: 

“In Virginia, the weather also has changed dramatically.  Recently arrived residents in the northern suburbs, accustomed to today’s anemic winters, might find it astonishing to learn that there were once ski runs on Baltimore Hill in McLean, with a rope tow and a local ski club.  Snow is so scarce today that most Virginia children probably don’t own a sled.” 

When confronted this week about his 2008 assertion, a frustrated and embarrassed Kennedy lashed out by pulling the Rush card: 

“Idiots on the right like Rush like to point to any cold weather anomalies as proof that global warming doesn’t exist.” 

Even more embarrassing for the global warming holdouts, they can’t even get their stories straight on whether climate change is making our winters drier or wetter. 

In a spectacle so farcical that it belonged on Saturday Night Live rather than MSNBC, host Dylan Ratigan decided to play kamikaze rather than take cover and avoid the issue.  With a straight face and apparent earnestness, Ratigan argued that D.C.’s record snowfall was caused by – you guessed it – global warming: 

“Here’s the problem:  these ‘Snowpocalypses’ that have been going through D.C. and other extreme weather events are precisely what climate scientists have been predicting, fearing and anticipating because of global warming.” 

Climate scientists other than Robert F. Kennedy, Jr., that is. 

So Robert F. Kennedy, Jr. claims that man-made global warming is causing snow-free D.C. winters.  Simultaneously, MSNBC’s Dylan Ratigan claims that man-made global warming is causing record D.C. snowstorms. 

Similarly, global warming alarmists claimed in the aftermath of Hurricane Katrina that we’d witness an onslaught of similar catastrophes.  Since then, however, we’ve seen an abnormally low number of hurricanes. 

But in the end, none of this really matters to the climate change hysterics.  Any element of larger intellectual coherence has disappeared following Climategate, global temperature declines over the past decade and record winter storms. 

All that remains are isolated, abandoned foot soldiers fighting their own contradictory battles, just like the legendary Japanese soldiers who refused to surrender long after their war was lost. 

TIME FOR A CONSULTANT ... OR POETIC READINGS

DANBURY -- Gov. M. Jodi Rell has announced that $6.7 million will be distributed to towns, including several in our area, for energy efficiency projects.

Rell said the money would help pay for projects that would ultimately lower costs to local taxpayers. The money, which came to the state through the federal stimulus program, can be used for a variety of projects including energy audits, retrofits and renewable technologies for municipal buildings.

Area towns that are slated to receive the money include: Bethel, $78,609; Brookfield, $9,050; New Fairfield, $65,828; Newtown, $102,573; Redding, $50,597; and Ridgefield, which will receive $94,124.