This FROM WALLINGFORD column was written by my counterpart on the column – Stephen Knight.
It was originally published in the Record Journal on Sunday July 10, 2011
Topics for this column can be elusive during the summer, but not this week. There is no way that I was not going to write about an article in the July 1st Record-Journal about the Town of Wallingford having attained the highest possible bond rating with Moody’s Investor Services.
The Mayor and the Comptroller may play this achievement down with characteristic modesty, but I am under no such compunction. This is a big deal, and it speaks volumes, and not only about how well the two aforementioned executives have managed the town’s finances. This is not just about money and how we stack up after being extruded through the Wall Street statistics machine.
If a person is known by the company he/she keeps, take a look at whom some of the other 17 Connecticut towns are that share the distinction of this Aaa credit rating: Greenwich, Darien, Westport, New Canaan, West Hartford, Simsbury, Madison and Woodbridge. How did li’l ol’ Wallingford find itself in company with these towns, some of whose residents are the most affluent in the entire nation?
So how did we find ourselves in such company? Apparently it is a complicated mix of factors that are compared, but three mentioned in the Moody’s Investors Service review are 1) a “sound financial position bolstered by non-General Fund reserves”; 2) “low debt position” (our debt per capita is a very low $930); and 3) the policy of funding pension liabilities at the actuarially recommended levels.
1) Our non-allocated cash balances have been the topic of considerable discussion and debate for years. The Town’s financial position has borne fruit yet again, and the rating agency also noted our “ongoing pay-as-you-go capital spending.” Significant reserves allow us to do that.
2) Debt per capita. How much of a town’s annual budget is spent paying interest and principal on the debt it has accumulated? Ours is at 3.7 percent, a level that the rating agency is very comfortable with despite the fact that we are just above the state median household income level. If we should suffer the loss of a large taxpayer, does our debt obligation endanger our fiscal stability? We can’t hammer our residential taxpayers like Greenwich could in such a case, so over-borrowing could put pressure on the town’s ability to provide services. Moody’s answer: we see no problem because you are a long, long way from maxing out your credit cards.
3) After acknowledging the investment losses suffered in recent years, Moody’s goes on to describe our pension funding as adequate, and added this sentence: “However, the town continues to contribute its full actuarially recommended contribution, which was $3.6 million for fiscal 2010, which Moody’s views favorably ” (emphasis mine).
If your eyes are starting to glaze over reading this financial stuff, trust me, I feel your pain. So let me just explain my exhilaration about our new credit status this way.
First, this has to be recognized as an achievement for Mayor Dickinson, Comptroller Jim Bowes and his predecessor Tom Myers, for the Town Council and the municipal government in general. With the school roofs replacement program looming, and the state economy in the tank, ratings like we have now will not likely last into perpetuity, but we should be proud that we enjoy them now.
But this acknowledgement by the financial experts is also a reflection on the whole town. It is a result of having a mature electorate that understands that municipal government is about making tough choices, about not allowing our reach to exceed our grasp, about preparing for the unexpected, about asking for what we need rather than what we want. We do not look to government to provide everything to everybody, and we support the many non-profit organizations that fill that gap. In other words, it is about knowing who we are as a community, and then going about being that community.