Does Stratford have a debt problem?
By Timothy Bristol
Recently a Yankee Institute study claimed that Stratford was the most financially distressed municipality in the state. It gave the town a fiscal health score of 12 out of 100. The report called Warning Signs: 2021 update; claimed that Stratford had $750 million dollars in debt at the end of its 2020 fiscal year and was one of only a few towns whose debt exceeded 200 percent of annual revenues. The study claims that Stratford’s problems are due to pension liabilities and its borrowing practices.
This study was mentioned in a recent Connecticut Post article titled, Is Stratford CT’s most fiscally stressed municipality? Where Mayor Hoydick refutes the claims in the study by saying “Their characterization of Stratford’s fiscal condition is predicated on inaccuracies and falsehoods.” Mayor Hoydick claims, “The town’s debt is also lower than the institute claimed, at $415 million, not the $750 million claimed in the report.”
One of the big sticking points for the mayor was the pension bonds the town has on its balance sheet saying “pension bonds aren’t an ideal use of town funds, but without them, the town would either have to raise taxes or reduce services to make up the difference. But because the bond payments are spread out over the years, the impact felt by residents should be minimal”
So, what are the facts about Stratford’s fiscal stress? The mayor’s position that Stratford does not have as much debt as the Yankee Institute report claims is technically correct. According to the Comprehensive Annual Financial Report from the town’s financial office, which the Yankee Institute was citing; the town’s total liabilities in 2020 were $779 million dollars. Only about $427 million dollars of that were notes, bonds payable, or other debt.
If the Yankee institute had just said Liabilities instead of debt that would have been more accurate. Most of the rest of the town’s liabilities were related to pension liabilities and OPEB (Other Post Employment Benefits). This total came to 378 million dollars.
The big problem for the town is that its financial statements from 2020 show a net position of negative $380 million dollars, as its liabilities outweigh its assets. Mayor Hoydick is right the town debt is lower than the report claimed. The problem with the mayor’s claim is that isn’t a good number.
According to the Secretary of States website under the grand lists for all municipalities, Stratford is the 6th most indebted municipality in the state behind Bridgeport, New Haven, Hartford, Waterbury, and Stamford. One of those things is not like the others. Stratford is not a major Connecticut city or economic hub in Connecticut. All of those cities except Stamford have higher mill rates than Stratford.
The question is not; if the town will have to raise taxes to pay its debts, but when!!
The current administration says the bond payments are spaced out enough to offset the need for higher mill rates, but will that be enough?
Debt servicing has already taken up an increased part of the budget. It went from around 5% of the annual budget in 2015 to 14.5% of the adopted 2022 budget. Debt servicing is taking money away from other town functions.