Sam Gurwitt Photo
Council members Justin Farmer, Eric Annes, and Athena Gary.
After battling for two years over using bonds to pay for operating expenses, the Hamden Legislative Council passed a resolution to require oversight before it happens again.
The council unanimously passed the resolution, drafted by Councilman Eric Annes with the help of town lawyers, at the last meeting of the 2017 – 2019 council Monday evening.
The resolution calls on the council to include new language in bonding ordinances. When the town issues bonds for capital projects, there are often funds left over. Sometimes the project ends up costing less than was bonded for, sometimes the bond includes extra funds for contingency, and sometimes projects that have been bonded for are no longer necessary, leaving excess funds. Sometimes bonds are also intended to pay for the salaries of town employees working on capital projects, for instance when the Public Works Department paves.
For many years, language in town bonding ordinances has allowed the administration to transfer unused bonded funds to pay for town operating expenses without council approval.
In his two years on the council, Majority Leader Cory O’Brien became a vocal opponent of the practice. He criticized Mayor Curt Leng for sweeping large amounts of bonded funds to end the 2017 – 2018 fiscal year in the black. He called into question a $1 million line in the current budget that counts bonded funds as revenue for the town. Using bonded money to pay for operating expenses, he maintained throughout his term, just adds to the town’s debt, pushing off payment of mounting liabilities.
For both O’Brien and Annes, Monday marked the last council meeting of their council careers, at least for now. O’Brien lost a primary to Kathleen Schomaker in September; Annes decided not to run for reelection.
In October, the council voted to include language in a bonding ordinance that would require the administration to seek council approval to use the bonded funds for budgeted expenses. O’Brien drafted the language, and though the actual bonding ordinance failed, his amendment to the language passed.
In an effort to send a final parting message, Annes took up O’Brien’s cause and drafted the resolution in collaboration with the administration.
The resolution itself does not bind the town to anything. It simply states that going forward, it is the policy of the council to include in bonding ordinances language requiring council approval to transfer bonded funds. The next council will have to include the language in its bonding ordinances in order for it to have a legal effect.
“Bond proceeds should not be used to pay for salaries, fringe benefits or any other budgeted cost unless approved by the Legislative Council,” the resolution reads. “Excess Bond Proceeds not needed to meet the cost of any Project should be transferred only by resolution of the Legislative Council.”
The resolution includes a passage that does give guidelines for what to do when the town has already approved a bond intending to use it for some budgeted expenses like salaries. “To the extent a Project includes costs for salaries, fringe benefits or any other budgeted cost, the Legislative Council shall adopt a corresponding resolution to transfer funds to the budget line items affected for such fiscal year at the time such Bond Ordinance is adopted or prior to the end of such fiscal year in which such bonds are issued for previously adopted Bond Ordinances,” it says.
Annes explained that he chose to bring a resolution to the council, rather than amending past ordinances, because of the limited time and because it would have caused “significant consternation” to amend past ordinances.
O’Brien said some clauses could be stronger. He still called the resolution “a huge step in the right direction” for financial transparency.