Bethel’s First Selectman is furiously posting on Facebook, attempting to justify his position on the surplus. He’s giving a “thumbs up” to articles against using the surplus, and inserting himself into back-and-forths with other posters.
It would be irresponsible on our part if we did not point out the errors in the information he is giving.
The posts below are interactions between Mr. Knickerbocker and a fellow called “Chris.” It’s not exactly clear what article they are referring to, and it doesn’t really matter for the point of this exercise.
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This is just one small example of Mr. Knickerbocker’s postings on Facebook!
Chris: How about the town use the "rainy day fund" for the roads and we vote "NO". Isn't that what the account is there for? "They don't want to break the piggy bank. But they forget that piggy bank is ours."
"We want to dip into surplus under policy," Michael said. "We're not introducing any new protocol. We just want them to obey their own policy."
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Matt Knickerbocker: Read the article, Chris. Dipping into the fund runs a high risk of a credit downgrade that could cost the town over one million in higher interest. This opinion from the town's financial advisor as well as from S&P is in black and white. It's a dumb risk and I'm glad the BOF has the courage not to do it.
OUR COMMENTS
1) We do agree that the Surplus is not the same thing as a Rainy Day Fund. But what is true is that the money in the piggy bank belongs to the taxpayers.
2) At the Special Meeting of the BoF, the Comptroller was asked how much extra interest would we need to pay if Bethel’s bond rating were to be downgraded. The answer was, a little over $600,000. When Mr. Knickerbocker says it would cost the Town over one million dollars, he has actually taken the interest from a AAA rated loan and doubled it.
If you would like to read Standard & Poor’s 2014 Ratings Report on Bethel that Mr. Knickerbocker is referring to, you can click here to read and/or download a PDF of that report.
Now, while it’s true that S&P mentions that Bethel shows a strong 16% (yes 16%) 2013 balance in the general fund (up from 11%), it ALSO cites Bethel’s the following as factoring into their decision to assign its high rating:
“The town has formally adopted a reserve policy to set the minimum fund balance at 10% of expenditures with additional policies for any potential use of reserves. It also sets guidelines of what excess fund balance may be used for (i.e., debt service, tax rate stabilization, and capital projects).”
Chris: Board of Finance Chairman Bill Kingston said he would rather see this money used for debt payments or a "rainy-day fund" for future budgets." So the BOF supports using that money for a "rainy-day-fund" for "future budgets"? Why not use that money for THIS budget?
Matt Knickerbocker: And no, Chris, that is not what the account is there for. Again, Chris, the Board cannot use it to directly buy down ANY budget. A portion of it can be used for future capital projects instead of borrowing money, and that lowers the "debt service" line in our budget. But they cannot just fill the budget hole without high risk of losing the credit rating.
OUR COMMENTS
Not true! Read relevant portions of the Board of Finance’s policy adopted by the Board of Selectmen in January, 2013 by clicking here.
Also, Mr. Knickerbocker calls this “buying down the budget.” This is not a “buy down” – it’s a transfer of funds from an account that is in line with an existing policy. And, there have been no other ideas put forth that seem to be able to get us to a reasonable budget!
Please know that the BAC does not support using the surplus at the risk of losing our AAA rating. We simply do not believe that the bonding agency would downgrade our rating for using 5% of the surplus to smooth out the mill rate, when a full 13+% will remain in the fund.
Use of the funds for this purpose is in line with the BoF’s policy AND Standard & Poor’s acknowledges this policy in its report.
We also want to point out that we have contacted comptrollers from surrounding towns, and asked them what their surplus % are. Here are the results. Note: Brookfield was recently upgraded to AAA status with 9.1% in their coffers!
Bond Ratings & Surplus %
Bond Ratings & Surplus %
Bethel 15% surplus
Brookfield 9.1% - Just upgraded to AAA in October 2013 – with only 9.1% surplus!!
Newtown 9%
New Fairfield 13.3%
Redding 13.8%
At this point it becomes a question of what the facts really are. How can we know for sure what the truth is when the information coming from the Town seems to change depending on the source!?
Cynthia McCorkindale, Chairman
Billy Michael, Treasurer
On behalf of BAC and its supporters
