Our Rube Goldberg debt policy
It’s no surprise that Board of Estimate and Taxation Republicans are attempting to justify their poorly performing debt policy just days before the BET, March 28 “decision meeting” (March 13 op-ed, “Right projects, right financing”). We know they’re worried, because last March they held the town budget hostage until their partisan policy was retained.
How did Democrats — who controlled the BET for the first time in memory — respond? They chose restraint, electing not to engage in a “food fight” over the budget. But, even handicapped by an inadequate debt policy they went on to show citizens they could govern sensibly, acting as careful stewards of the town’s resources.
Still, one wonders why Republicans consider our town’s debt policy to be a partisan issue? Shouldn’t a debt policy be a simple matter of figuring out what a town needs to keep its infrastructure up to date, then agreeing on a fair way for citizens to pay for it?
Unfortunately, the current debt policy has nothing to do with what our town needs or with fairness. It has everything to do with maintaining a borrowing formula that produces a fixed, limited outcome, irrespective of what the town needs. As a result, one only needs to look at the embarrassing condition of our town schools, built on average in 1953.
But the current “pay-as-you-go” policy has a problem. To automatically restrict investment, it requires a Rube Goldberg borrowing formula to make it work: stipulating that three or even six separate borrowing excursions into the debt markets are required for every project financed. And today, with rising interest rates each loan (bond) is likely to be more expensive.
On the other hand, what do other Gold Coast towns do? They borrow just once, for a flexible term, matching the “useful life” of the project financed, and locking in a low interest rate on the bond. These “useful life” loans ensure that future users of a school, for example, pay their fair share, while reducing the burden on today’s taxpayers. Consider New Canaan’s finance policy for example: they consider “Long-term financing is an important tool in the management of intergenerational assets.”
Useful-life loans are intrinsically fair — ensuring that today’s and tomorrow’s users pay their fair share of the asset they use at the time they benefit from it.
Nonetheless, those who defend our antiquated debt policy continue to offer up a few “feel good” platitudes as justification, such as: “We don’t want to burden the next
generation with debt.” Really? We absolutely will burden the next generation with debt; it is a debt that doesn’t show up on our town’s balance sheet however, it’s debt that’s imbedded in the obsolete schools that we will bequeath to the next generation.
It’s true Greenwich does have strong finances; the reason is our “grand list,” which other towns would “die for.” But imagine, how “strong” Greenwich looks to outof-town home buyers, when a real estate agent drives them by one of our outmoded schools, say Central Middle School, then compares that school to a more up-todate school in New Canaan or Westport. It’s that debt, that we owe ourselves that is obvious for everyone to see.
This is just plain absurd. One only need ask any town building official if they can manage multiple building projects simultaneously. They will tell you that they only need a few months separation between projects to manage the construction of large projects.
But now voters know this, and November isn’t far away. They know that it’s our self-inflicted debt policy that’s responsible for, among other things, the condition of our Old Greenwich Civic Center and the average Greenwich school built in 1953. Tick, tock.