NAUGATUCK — Officials are restructuring the borough’s outstanding bond debt, which will trim the budget by about $1 million in each of the next two years but cost an additional half-million dollars in each of the following five years.
The refinancing will ultimately cost $368,000 over 23 years, according to a document prepared by Controller Wayne McAllister.
Finance board member Matt Katra wondered last Monday whether the move amounts to “kicking the can down the road,” while Burgess Bob Neth and Mayor Bob Mezzo said it’s a “creative solution” that will cut costs in the short term to get the municipal budget—not to mention taxpayers—through an economic downturn they hope will swing back by 2013.
If the borough continues to experience modest grand list growth in coming years—it expanded by just .3 percent this year—“we’re really going to be in trouble as a community,” Mezzo said.
But, more optimistically, he and finance board member Don Carten felt the value of the dollar will change for the better in the near future.
“Unless we continue along a catastrophic line, the value of today’s dollar will be worth more tomorrow. So we’re talking about locking in with today’s dollars,” Mezzo said. “It’s certainly not the ideal thing that we want to do, but lots of businesses, lots of homeowners and, quite frankly, lots of governments are refinancing their debt obligations so they can get through a time when grand list growth and income are limited.”
Finance board Chairman Ray Lennon, Jr. added, “I think we’re looking to buy some time toward an economic turnaround, when we would be able to support this, because currently we’re having a hard time supporting the budget proposals, and this would give us some breathing room.”
So while officials catch their breath in the next two years, they will continue to proactively pursue commercial investors interested in staking their lots in Naugatuck, Mezzo said.
“If we have not achieved substantial grand list growth [in three to five years], then shame on us, because that’s really where your ability to pay for additional payments in the future will come from,” he said. “Clearly, it’s hard to grow your commercial tax base when major investors are sitting on the sidelines, waiting for the market to shake out.”
And while Mezzo acknowledged that, as Katra asserted, the borough would find itself in a “pickle” if things don’t pan out in the next two years, he felt the move was a responsible way to ease residents’ tax burden in tough times.
Furthermore, he compared Naugatuck’s coping strategy with that of the state, which finalized its budget last week by borrowing almost $1 billion, raiding state workers’ pension fund—Mezzo said borough employees’ pension fund has been left intact—and imposing a new surcharge on electric bills, leaving a $3.4 billion gap for the next governor and legislature to contend with.
“Quite frankly, when you look at the responsibility factor for municipalities, when compared to the state of Connecticut, there really is no comparison,” Mezzo said last Thursday. “I mean we did a very small, responsible refinancing of our debt obligations. … I think what the state is doing is ridiculous in terms of mortgaging the future, and quite frankly, as one legislator aptly put it, ‘punting’ on this year’s budget. What we did does not compare in any magnitude to what the state is doing.”
For now, borough officials—including Mezzo, who will be up for reelection next spring—are crossing their fingers and hoping, like taxpayers, businesses and governing bodies everywhere, for a new day to dawn.