Thursday, April 16, 2009

Conn. Communities' 2010 Financial Outlook Is Grim

WORRIED MUNICIPALITIES LOOK AHEAD

Conn. Communities' 2010 Financial Outlook Is Grim

| The Hartford CourantApril 15, 2009
The economic nose dive is driving Connecticut communities this year to slash services, lay off employees and raise taxes.

By next spring, could these look like the good old days?

While they struggle to balance their books through the worst year in memory, municipal and school leaders are also looking ahead to 2010 — and their projections are grim.

Communities are scrambling for short-term fixes, but many of those solutions — reserve funds, stimulus money, one-time employee concessions — won't be available next time around. And next year, municipal pension plans will start showing the real damage of the Wall Street meltdown.
"Any public official who is banking on next year being better is being, well, less than honest or is suffering from severe denial," West Hartford Mayor Scott Slifka said.

"I would predict that many programs/jobs [statewide] that are 'saved' in the current year will face elimination in the next year," he said.

Unless the state suspends mandates or boosts education aid, "we are about to fall off a cliff," cautioned Bristol Superintendent Philip Streifer.

What to do? Recommendations vary, but three points win broad consensus: Huge property tax increases won't work, local government must be permanently restructured, and the state mandates that once were merely inconvenient are now flat-out unaffordable.

Last week, The Courant contacted six municipal and school leaders who were among the first to identify the severity of the economic downturn last fall. They agree that an economic recovery would sharply improve the forecast; otherwise, the state should brace for more turbulence in 2010.

The chief problem is that the easiest-to-find savings will be gone. Much like families selling their SUVs or canceling cable service, towns are grabbing all the "low-hanging fruit" this year to make ends meet. That means tougher choices next time if more cuts are needed.

Plainville Town Manager Robert Lee summed it up this way: "Most of the 'moderately difficult savings' have been wrung out of the budget."

Some examples:

•In the midst of this economic downpour, towns are raiding their rainy day funds. But if the rain is still falling next year, that money won't be available.

•Much of the federal stimulus money should be gone by then, too. Some funding extends into 2010-11, but at lower levels.

•Many city unions are reluctantly accepting wage freezes or givebacks this year; the resistance to a second round is likely to be tougher.

•Postponing vehicle replacements and building repairs now will cluster extra expenses in 2010, when another year of delays may prove impossible.

And starting in mid-2010, many communities will have to pony up big money to cover pension fund losses. Bills for pension contributions lag nearly a year, so towns now are making up for investment losses before last summer. The worst effects of the collapse will hit next winter. Slifka projects that for many towns, the impact looks to be "staggering."

Homeowners are already under strain, so big property tax increases aren't feasible, officials agree.

"The ability for taxpayers to pay their taxes is obviously in question with high unemployment," said Bristol Comptroller Glenn Klocko. "If they can't pay today's tax levels, how can they support tomorrow's levels?"

Streifer projects his schools need annual 1-mill increases for years to keep up with mandates and special education inflation, and acknowledges bluntly, "That is unsustainable."

He questioned why the General Assembly won't suspend costly state regulations.

"The state is just not interested in acting in this arena," he said.

Change at the local level is inevitable, officials agreed. Farmington Valley towns, traditionally hard-line advocates of home rule, are open to cooperation now.

"We need to use this year to look at structural changes in government that will help us get through the future difficult years, such as regional collaborative efforts, regional dispatch systems and sharing staff," Simsbury First Selectman Mary Glassman said.

Manchester has been reducing staff for years, and is doing away with defined-benefit pensions for non-union workers.

"Municipal operations are well into a permanent state of scarce resources," Manchester General Manager Scott Shanley said. "Illusion now will just prolong the crisis. I don't mean to be negative, but also don't want to be caught unaware. The challenge is, we just don't know what's ahead."

Shanley sees a positive side: The challenges of 2010 can be predicted, unlike the sudden nationwide implosion last year.

"At least for next year we have more time to plan," he said. "We are already on it."

Sunday, April 12, 2009

Satellite, Over Air Broadcast, or Cable TV ... you have rights to public video records!

April 13, 2009
Freedom of Information Commission
18-20 Trinity Street
Hartford, Connecticut 06106

Telephone: (860) 566-5682
EMAIL: foi@ct.gov

To whom it may concern:
On March 8, 2009 I presented [email] an FOIA request to our local community TV channel 17 producer [Mr. Ray Juskiewicz] to review certain meetings.  I was denied access to review these public video archive records. 
Channel 17 is a community access TV channel originating from the New Fairfield High School video studio.  The access channel uses the Charter Cable franchise for the local area and the Charter franchise has assigned Channel 17 for New Fairfield community access TV.  The Board of Selectman and Board of Education mutually share in the funding of the operation of Channel 17 as a community access and educational channel to serve the New Fairfield community.  Channel 17 can be viewed by any Charter Cable subscriber by selecting Channel 17.  Residents of New Fairfield that are not subscribers to Charter Cable do not have access to Channel 17.  Residents of satellite TV service [Dish TV and Direct TV] and over the air broadcast TV do not have access to Channel 17. 
Channel 17 has video archives of all government and educational programming and is totally supported by taxpayer funding.
Last week, April 9, 2009 I had the occasion to meet and ask Mr. Ray Juskiewicz when I could review these public video records.  Mr. Juskiewicz’s reply was, “if I wished to review the video archive that I would be charged $25.00 per tape [DVD].  I replied that these are public records paid for with public taxpayer funds.  Mr. Juskiewicz, the producer of Channel 17 replied that I would have to ask Mr. Hodge, First Selectman of New Fairfield to access and review these public video records.
I had previously copied Mr. Hodge and Dr. Castanginola, Superintendent of Schools and received no reply.  Dr. Castangnola was also communicated with directly via email and no reply was forthcoming.
Sincerely,
Roger C. Wise

Friday, April 10, 2009

MOODY'S ... SHOCK WARNING ON US MUNICIPAL BONDS!





WELL BOE AND BOS WELCOME TO THE REAL WORLD!
INTEREST RATES ARE LOW, BEST TIME TO BORROW, NOT FOR LONG. QUOTE JOHN HODGE, PAUL BRUNO AND TOM EDWARDS, UNQUOTE.

AND THIS FALLS RIGHT IN PLACE WITH THE 10 STATES THAT HAVE INDICATED WILL BE EITHER RAISING TAXES OR CUTTING SERVICES WHICH INCLUDES CONNECTICUT.


SO AS OUR GRAND LIST DROPS LOWER TAXES RCEIPTS SERVICES SUFFER OR REDUCED OR THE TAXES ARE RAISE TO MAKE UP THE SHORT FALL.


WILL BE INTERESTING IN THE NEXT MONTH OR SO.

MOODY’S

Shock warning on US municipal bonds

The creditworthiness of the entire US local government system is at risk, credit ratings agency Moody's has warned, as the global recession continues to pinpoint its latest victims.

 By James Quinn
Last Updated: 7:30PM BST 08 Apr 2009
The unprecedented warning – the first time Moody's has made such a warning about the US local government system as a whole – was made in the light of the continued recession and the problems that it is causing for city and state governments.


Moody's said that it was assigning a negative outlook to the entire $2.6 trillion (£1.8 trillion) US municipal bond sector – operated by local town, city and state governments – because of the combined collapse in the financial and housing markets.


Analyst Eric Hoffman said what could prove to be the worst recession since the Great Depression of the 1930s will pressure "many if not most local governments" over the next 12 to 18 months.

The warning is important because municipal bonds are one of the key ways local authorities raise medium and long-term finance in the US, and if investors sense that they might not be paid, bond issues are likely to go unsold.


Local governments have been hit by reduced tax intakes as more residents lose their jobs, and as more companies in their areas either close or have produced losses.


The state of California has so far been the poster boy for the problems in local government funding, with Governor Arnold Schwarzenegger faced with reducing a deficit expected to reach $42bn by 2010.


But smaller entities are also hurting, such as Jefferson County, Alabama, which has been threatening to default of some of its bond payments for a number of months.


Mr Hoffman said that those localities most at risk of a downgrade will be those heavily reliant on car manufacturing, property and financial services, as well as those who have been heavily reliant on property taxes or those have a high proportion of fixed costs.

More States Look to Raise Taxes --- Connecticut is one!

By LESLIE EATON


A free fall in tax revenue is driving more state lawmakers to turn to broad-based tax increases in a bid to close widening budget gaps.

At least 10 states are considering some kind of major increase in sales or income taxes: Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin. California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year.


Fiscal experts say more states are likely to try to raise tax revenue in coming months, especially once they tally the latest shortfalls from April 15 income-tax filings, often the biggest single source of funds for the 43 states that levy them.

More
[Big Jumps in Taxes Loom in 10 States]
·                             Chart: See state-by-state details on tax revenue and budget deficits
The squeeze is especially severe in states hit hardest by the recession, such as Arizona, where sales-tax revenue has fallen by 10.5%, income-tax collections are down 15.7% this fiscal year, and the government faces a $3.4 billion budget gap next year. But such shortfalls are likely to be widespread; federal income-tax receipts from individuals have dropped more than 15% in the past six months, according to Congressional Budget Office estimates.


While most states so far have managed to cope with dwindling cash by cutting spending and raising fees on things such as fishing licenses and car registrations, that is unlikely to be enough in the new fiscal years that generally begin July 1, many analysts said.


"Income taxes and sales taxes are the go-to taxes when you really need to raise a lot of money," said Donald J. Boyd, who monitors states' fiscal health for the Rockefeller Institute of Government in Albany, N.Y.
Sales-tax revenue has fallen more sharply than at any time in the past 50 years, Mr. Boyd said, and he expects income-tax collections to drop below levels state officials projected -- though the extent of the damage probably won't become clear until May.


[quarterly state tax collections]


Raising taxes is a perilous proposition for lawmakers, who must balance their states' budgets every year. Not only do they face political heat for increasing financial burdens during the recession, but added taxes risk worsening their states' economic problems by, for example, further hobbling consumer spending.


Some lawmakers say they have little choice. "With the size of our budget gap, we are looking at a situation of closing down our courts, releasing prisoners and cutting the school year by as much as a month," said Rep. Peter Buckley, co-chairman of Oregon's joint Ways and Means Committee.


His committee is considering an income-tax increase on high-earners, along with major budget cuts, to help close a projected $4.4 billion budget gap over the next two fiscal years. And things could get worse after a revenue forecast due out May 15, he said, because Oregon's unemployment rate has climbed to 10.8% and the state relies on income-tax revenue.


Oregon Gov. Ted Kulongoski is likely to support the surcharge, said a spokeswoman , because the state is faced with losing as much as a third of its tax revenue.


Legislators know the increases will be unpopular with residents. "There will be blame, we accept that," Sen. Eileen M. Daily of Connecticut said earlier this month when she and fellow Democrats announced a budget that raises income-tax rates and expands the sales tax to raise more than $3 billion over the next two years. Connecticut Gov. Jodi Rell, a Republican, has said she would veto the plan.


But some governors are proposing tax increases. Delaware Gov. Jack Markell wants to raise the marginal income-tax rate by one percentage point, to 6.95%, on those earning more than $60,000 a year, effective in 2010. His budget plan also includes increases in corporate taxes as well as spending cuts to close a projected $750 million shortfall in a $3 billion budget, said spokesman Joe Rogalsky.


Many states remain determined to balance their budgets by relying solely on spending cuts. That is the case in Indiana, where raising revenue "is really not on the table," said Pat Bauer, the speaker of the state House.  Instead, he hopes to tap the state's rainy-day fund and to produce a budget that covers only one year, rather than the usual two, because plunging revenue makes it impossible to forecast that far in advance.


Tax collections have dropped drastically the past four months, according to Christopher A. Ruhl, director of the Indiana Budget Agency. Income-tax collections, which reflect withholding and estimated tax payments, fell 21% in March compared with last year and are down 7% for the fiscal year.


States have lowered revenue forecasts repeatedly in recent months, yet the estimates still seem to exceed the grim reality. Last week, Pennsylvania officials said total March tax collections were $334.6 million, or 7.9%, short of expectations, due to sharp drops in income and sales taxes and a steep decline in corporate income taxes. For the fiscal year that began July 1, 2008, collections to date are running $1.6 billion less than forecast.


This has led some experts, such as Nicholas Johnson of the left-leaning Center on Budget and Policy Priorities, to predict more legislatures will take up broad-based tax increases as early as May or June. "The problem," he said, "is that they are filling a hole that has gotten a little deeper."


Write to Leslie Eaton at leslie.eaton@wsj.com

PRESERVE NEW FAIRFIELD 990-EZ IRS FILINGS ...

 The current economic problems started innocently extending credit where sufficient income was absent. Preserve New Fairfield ability fund the terms and conditions of the lease are questionable.  At the end of this blog are two links to the 990-EZ IRS filings for Preserve New Fairfield ... read them and make up your mind whether your tax dollars for the term of this lease is in your best interest.

Or perhaps just follow the "leader" over the next bridge.  So, lets take a stab at the lease [see link at bottom for lease] ... based on a general reading (not detailed, particularly in terms of understanding what specific portions of the property are considered "licensed" and "access"), a few thoughts...


  • Section 1.3:  need to better understand what is contained in the referenced "Preservation Covenants", particularly as they relate to "private functions" (is there any limit on the number of people per private function and the type of activity that can be carried on at such a function?)
  • Section 2.1:  last sentence should be deleted
  • Section 2.2:  what issues currently exist with respect to installing a compliant bridge?  Cost?  Limitations on types of vehicles that can pass?
  • Section 4.2:  coverage limits are far too low, given the number of people who could be on the premises at one time and PNF lack of any assets
  • Section 4.5:  Hold harmless clause is rendered close to worthless based on lack of PNF assets
  • Section 4.8:  Problematic, especially given questions re: "private functions"
  • Section 5.1:  Needs to clearly state Owner will not provide snow removal
  • Section 6.1:  PNF's financial condition probably prevents it from complying

Overall, I don't think that PNF has the financial resources required to maintain the property, as required in this lease, and maintain the insurance coverage needed.

An attorney familiar with public/private leases should review and comment.  So where is Mr. Keating option?  Furthermore what is the next step for Board of Finance?



FOR COPIES OF PNF 990-EZ FILES CLICK HERE > PFN 990-EZ 2007 IRS FILING 
FOR A COPY OF PNF 990-EZ IRS FILING CLICK HERE >PNF 990-EZ 2006 FILING 
FOR A COPY OF THE PNF LEASE CLICK HERE > Preserve New Fairfield Lease