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The original item was published from 9/9/2008 12:00:00 AM to 10/30/2019 12:12:34 PM.

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Posted on: September 9, 2008

[ARCHIVED] 9/9/2008 - **PRESS RELEASE FROM FIRST SELECTMAN RAYMOND BALDWIN - SEPT 9, 2008**

       

PRESS RELEASE – SEPTEMBER 9, 2008
By: FIRST SELECTMAN RAYMOND G. BALDWIN, JR. 



Much has been made recently about the state of Trumbull’s financial affairs and particularly our bonded debt. Questions have been raised about the extent and legitimacy of that debt; and, so, I’d like to offer some explanations and assurances to our citizens. 


This administration has always chosen a careful, thoughtful approach to the financial challenges we face, and we are managing those challenges with the strength of our convictions and the guidance of professional municipal finance experts.


Because we have invested in our infrastructure, even during these difficult times, our property values will be among the first to rebound when the recovery begins.


It is easy to identify a problem, but to simply dwell on a problem without offering a solution shows no leadership whatsoever. We prefer to look for solutions, consider our options, suggest changes and are willing to listen to and to act upon a good idea no matter where or whom it comes from.


Let me give you an example of one misconception that has come to my attention. It involves bonding for capital improvements projects.


Some say our bonded debt is too high (some $125,440,000); and, then go on to criticize spending $80 million more on the renovation of a thirty-seven (37) year old high school, implying the debt will be an astronomical $200,000,000. This is simply untrue and terribly misleading.


Our bonded debt is not high. In fact, it is “moderately” low according to three (3) Wall Street rating agencies. Moreover, an analysis of our bonding reduces the number significantly. Almost $35 million of the debt is for land acquisition, ie. property we own and which is listed as an asset on our balance sheet. A large portion of that inventory was purchased over 18 years ago and, thus, the debt will be retired in the next 2 to 3 years.


A reasonable estimate is that today this land is worth between $55,000,000 and $65,000,000; which means the Town has an asset which if liquidated could bring our debt down to $60,000,000 or $70,000,000. That number is extremely low and certainly not a cause for concern. 

PRESS RELEASE – SEPTEMBER 9, 2008 PAGE 2

By: FIRST SELECTMAN RAYMOND G. BALDWIN, JR. 



In addition, we retire our bonded debt on an accelerated basis (an above average rate of 65.2% within 10 years); and, in fact, we receive high marks for doing so by all the Wall Street Rating Agencies. (Reference Finch report)


Every year, we pay down approximately $9,000,000 of principal on our bonded debt; and, thus, when the High School is completed five years from now, the present bonded debt will be reduced by forty-five million dollars.


Sewer bonds amount to $46,173,000 of the bonded debt. The Town is reimbursed by the homeowner for 75% of that amount or $34,630,000; but, the entire amount must be carried by the Town on our books until it is paid-off. 


By reducing the bond balances as we do, there will never be a time in the next five (5) years where our debt will balloon to $200,000,000.


Does this signal a cause to go on a spending spree? Of course not; but, it is proof positive that we should continue to invest prudently and cautiously in our capital assets and infrastructure without the fear of over-spending.


Another misconception is that the Town is on a spending spree without direction.


We bond for very few things. For the most part it is for sewers, schools, road paving and repairs or renovations of our buildings and capital assets. It is not a frivolous enterprise. It’s unfortunate that an elected official who promotes himself as a financial expert compares the Town’s bonded debt with the use of a credit card.


The comparison of bonding for capital projects such as a new roof at Jane Ryan School and the use of a credit card is weak rhetoric and pandering to ignorance and fear. Analogies by nature are not exact; this one is not even close. Bond debts are amortized over time, and there are no minimum interest payments. In addition, the borrowing rate for bonds is 4%, not 18-24% as it is for credit cards.


We will continue to need to bond for certain projects in the future, but we will do so with the clarity of thought to prioritize these expenditures to best maximize our investment and improve our town now and for the future.

    

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