Letter: Approving charter revisions would ultimately increase debt
To the Editor:
There are many aspects of this charter revision that are of concern. One such proposed change will increase the dollar amount the Board of Aldermen can borrow at their discretion without oversight. Let me be clear, these transactions require transparency.
The charter currently allows the aldermen to borrow $2.6 million (2 percent of authorized budget) for capital items, without referendum, in a fiscal year. These transactions are decided solely by the Board of Aldermen without citizen input or oversight from any other body. The charter revision would increase the BOA authority to borrow up to 3 percent or $3.9 million. Essentially, with this change, the charter revision gives the BOA a blank check for $3.9 million.
Debt is created through bonds or loans, and subject to specific accounting rules that allow cities to invest in capital improvement projects. It does not cover day-to-day operating expenses, recurrent expenses or short-lived items. These capital items must have useful lives longer than the length of the loan. Of note, Shelton’s bonds held at the end of 2019 totaled $29 million with interest due of $1.8 million. Increasing debt increases the interest on the debt and ultimately taxes.
The mayor states that he is reducing the city debt, but here we are attempting to increase the BOA’s borrowing authority by $1.3 million. Why the contradiction? What I find most troubling about the BOA’s use of debt is that these items are approved with little to no discussion about the purpose or benefit to the city. Further, there should be a formal policy controlling these transactions, as in other towns, so the city’s credit quality is protected and enhanced.
But the credit agencies have already noticed our fiscal practices. After the $12.2 million surplus evaporated in 2019, Moody’s downgraded our bonds stating “consecutive years of draws on fund balance that have materially weakened the city's financial position.”
There is no reason to accept the Charter Revision Commission’s proposed change. Instead, the city should immediately begin reporting on these expenditures and implement a formal debt policy that specifies the purposes of the borrowing, borrowing limitations, forms of debt and length of the loans.
No more blank checks that increase debt. Vote no to the charter revisions on Nov. 3.
Shelton Democratic Town Committee