Wherever they were last week, Westporters appreciated hearing that our mill rate will actually fall in the coming fiscal year.
Bart Shuldman was in China. On his flight home, he reflected on the news:
Westport taxpayers received good news regarding the mill rate for fiscal year 2016-2017. The Board of Finance approved a 6.8% decrease from the previous year, based on the growth of the Grand List and the good work by Jim Marpe, Avi Kaner and the Board of Finance at controlling costs for the coming year.
In addition, Westport taxpayers will also pay less property tax on their cars. We should all thank Jim, Avi and the Board of Finance for their diligent work, as Westport is not like any other town in Connecticut. Many, if not all surrounding towns are experiencing either small or large mill rate increases.
Westporters also learned additional good news: The town will continue to pay down debt, and also continue to pay the Actuarial Required Contribution for the town employee pension plan. I do not think most people know how important this piece of the news is to all of us.
Some background: Many years ago the town implemented 2 major employee benefit programs, a defined pension plan and something called OPEB (Other Post Employee Benefits). In addition, past town leaders borrowed a lot of money and accumulated a large amount of debt.
In 2011, after a very deep recession, Westport’s debt stood at over $156 million. Our pension liability was over $186 million, and the OPEB liability was more than $84 million.
Making matters worse, for years before 2011 Westport was not funding the Actuarial Required Contribution necessary to meet the pension obligations promised to town employees. Then the stock market went through the 2009 recession, causing pension assets to decline. Westport taxpayers were on the hook for hundreds of millions of dollars.
Fast forward to today. With the good work of Jim, Avi and the Board of Finance, the town is in much better financial shape. While the pension obligation has grown to over $270 million, the pension is 85% funded.
As noted above, Westport is now paying the total Actuarial Required Contribution and also making up for past underpayments. Meanwhile, the town’s debt is down to $115 million.
What might surprise many residents is that debt service, employee pension and OPEB obligations are an enormous percentage of the budget. Principal and interest cost on the town’s debt is over $14 million. Pensions cost the town over $16 million, and it appears OPEB costs over $10 million each year. Therefore, almost 20% of the town’s budget goes to decisions made many years ago, and does not fund current town needs and potential projects.
Westport residents should thank our current town leaders for doing what is needed to control costs and manage the town’s obligations.