Dear Editor and Citizens of Westfield,
I am writing to express my displeasure with the article entitled: “Mayor: City Better Positioned Fiscally”. This type of story infuriates me, and does a disservice to every taxpayer in the city who reads this newspaper. This is a one-sided self-promoting piece of bloviation (to borrow a Bill O’Reilly phrase).
The bond rating increase is nice, and does result in lower interest rates. But, the fact is we pay for those bond ratings and the ratings companies are now known for taking it easy on their paying customers (see http://bit.ly/1lhYHGP ). Have you noticed that most dentists are now telling you that you’re doing a wonderful job taking care of your teeth? They’ve learned that they get more business this way. Same with the bond rating companies. There is competition in the rating market, and the rating companies know that if they give you mediocre reviews that you’ll take your business elsewhere. One area of concern that bond rating companies are ignoring is the huge snowballing unfunded obligation related to pensions and retiree healthcare. The mayor referred to this, but downplayed it to the bond companies and the public by saying the employee union groups are working on it. It’s a major problem, and one that isn’t going to be fixed easily or quickly. The employee groups are certainly not eager to do anything that will reduce take home pay or long-term benefits for their members (rightfully so from an employee perspective). The city is currently not paying about $20,000,000 per year that should be allocated and invested in order to satisfy the long-term promises made to former and current employees. This $20 million is snowballing, and you the taxpayer are going to get stuck with a HUGE bill in the coming years. If you think your tax bills are high now, the snowballing obligations (debt) number is actually over six times your current year tax bill – and that’s as of today. If this is paid over time, it will be much much larger.
As far as the recent bond sale goes, the mayor implies that his wonderful financial management skills have put us in a position to receive a $4.3 million premium on the bond sale. Does anyone in their right mind think that intelligent bankers and savvy investors are just giving us another $4.3 million because they like our city? Nonsense! This is just like the cash back scam that is used to sell new cars, or the cash-back at closing deals that were common in the real-estate market a few years ago. This $4.3 million is extra money that is added into our long-term debts – it’s not free money. The “premium” is a financing term that relates to bond coupon rates vs current market rates – not a sign of Westfield being a “premium” city. The mayor talking about adding this money to our reserves, and talking about how wonderful it will be to have $13,000,000 is horribly misleading. It would be like you taking a cash advance on a credit card and putting that money in your savings account, and then thinking you are richer, or managing your money well, because your savings account balance is higher. Starting a budget season by telling employee unions and department heads that you’ll have $13 million in the reserve accounts is absolutely reckless.
If he wants to play that game, I have a couple of suggestions: how about we take the entire $4.3 million and use it to reduce the bond amount for the senior center; or, how about we take the $4.3 million in “premium” plus any “free” cash from 2014 and pay down any part of our over $300,000,000 in long-term debt and obligations?
As far as the mayor taking credit for increasing the reserve funds from $6.5 million to $7.5 million, how do you think that happened? Take a guess… he deferred obligations and borrowed more money! You’re on the hook for it. The furlough day scam alone makes up a huge chunk of that. If you want to compare this increase in reserve funds to other investments, a blindfolded drunk monkey shooting darts to
choose from a list of high-yield high-grade low-risk bond funds would have been able to turn $6.5 million into more than $7.5 million in the last four years – it only takes a compounded return of about 3.65%.
If you want to truly measure the financial strength and position of the city, you also have to look at the debts and obligations. No right-minded taxpayer would measure their wealth and financial acumen by only looking at their savings account. Mortgages, car loans, student loans, off-the-book debts, future obligations, and market values of assets have to be included. When you look at that bigger picture in Westfield, and compare the net asset value of the City when the mayor took office, and the net asset value today, you’ll see that there is nothing to cheer about.
Regards,
Dave Flaherty, City Councilor
