Sam Gurwitt Photo
Jim Pascarella and Cory O’Brien.
After two years of fighting over the use of bonded funds to pay for budgeted operating expenses, the Hamden Legislative Council voted to send a signal, if only a symbolic one: It wants more oversight of how bonded funds are used.
That signal came in the form of an amendment introduced at a Council meeting Monday night to a $3.5 million bonding ordinance for road, sidewalk, parking lot, and other infrastructure repairs.
The actual ordinance itself failed 10 – 4 Monday evening. (It failed because it’s too late in the season to start paving, so the matter will return to the council in a few months.)
The proposed amendment would have required that the council approve any transfer of those bonded funds to pay for expenses that are already accounted for in the town’s operating budget. The amendment passed 8 – 6 before the whole ordinance failed.
Majority Leader Cory O’Brien introduced the amendment. In his two years on the council, O’Brien has repeatedly raised concerns about how the administration has used bonded funds to pay for expenses usually funded as operating expenses in the town’s budget.
O’Brien’s amendment would require the council’s approval before the administration could transfer bonded funds to pay for any use other than the project the town issued the bond to pay for. “Bond proceeds financing the Project may not be used to pay for salaries, fringe benefits or any other budgeted cost unless approved by resolution of the Legislative Council,” the amendment stated.
When the town bonds for capital expenses, it sometimes has bonded funds left over afterwards. In some cases, the town cancels projects, leaving even more unused. Bonds also sometimes produce premiums, when investors pay more up front than the bond actually asked for. In all of these cases, the administration has been able to use these unused funds to pay for expenses in the town’s operating budget.
In some cases, O’Brien acknowledged, that’s acceptable. But he has stressed repeatedly that those funds are still bonded funds, and still accrue interest, costing the town more in the long run. He has also said he worries that the administration canceled projects to use bonded funds to close budget shortfalls when the budget overestimated revenues.
In the 2017 – 2018 fiscal year, the town ended up with a $9 million budget shortfall. Mayor Curt Leng managed to close it partly by negotiating down the amount the town had to pay into its pension fund that year and by using bonded funds to pay for budgeted expenses, including salaries. (He also managed to get large savings from union concessions and through a hiring freeze). O’Brien, and Councilwoman Lauren Garrett, vocally opposed that move.
This spring, while the council amended Leng’s budget, O’Brien tried to fight a $950,000 “town project reimbursements” line in the “miscellaneous revenues” section of the budget. That line accounts for extra money from bonds that is counted as revenue. As Interim Finance Director Myron Hul explained at Monday’s meeting, without that line in the budget, that would be $950,000 that the town would not have to pay for salaries.
In many cases, as the administration has said, that line is used to pay for public works salaries when public works employees carry out milling and other projects that the town ordinarily bonds for. If the town hired a contractor to do it, it would pay for the salaries of the contractors doing the work with the capital project’s bonded funds. Since it’s town employees doing the work, that means town employees see those funds in their paychecks. However, said O’Brien, “it’s not just public works salaries.”
O’Brien’s ordinance would have applied only to Monday’s failed $3.5 million bonding package for road repairs. Similar language would have to be applied to every subsequent bonding ordinance. Nonetheless, council members said they wanted to set a precedent with the amendment, even if would have no practical effect.
“This amendment, from my perspective, is an obvious no-brainer,” said Councilman Eric Annes. “We’re just saying this body has the final word on it. And the idea that anyone on this council has a problem with it is bizarre to me.”
“I think that this language is appropriate,” said Councilwoman Betty Wetmore, one of two Republicans on the council. “I would like to see it in all of our bond ordinances.”
Some council members, however, said they did not want to vote for the amendment because it would not have any effect anyway.
“In my opinion, the bond will never have the effect of law because it won’t pass,” said Councilman Jim Pascarella. It would be “nothing more than a slip of paper.” Bonding ordinance require a two-thirds majority in the council in order to pass. Furthermore, the administration had requested that the council fail the ordinance.
Interim Finance Director Myron Hul.
There is some risk with such an amendment, said Hul. You “cannot guarantee that it will be eight votes to approve the transfer,” he said. “Therefore there is some risk.”
O’Brien pointed out that bonding ordinances need ten votes to pass in the first place. The transfers of bonded funds afterward only needs eight.
The bonding ordinance almost did not come off the table in the first place. Six of fourteen council members voted not to discuss it at all on Monday.
O’Brien recently lost the Democratic primary for his Sixth District seat to Kathleen Schomaker, meaning he will not serve on the next council. He asked that his successors introduce this language in future bonding ordinances when he is no longer on the council.
Councilman Justin Farmer said that he plans to introduce a resolution to the council that would make such language in bonding ordinances common practice.
Mayor Leng had agreed with not passing the ordinance Monday night since it’s too late in the season to plan for paving before the spring. Asked about the amendment, he said, “I just want to pave our town roads and fix sidewalks. This is important neighborhood investment.”