Politics & Government

OP-ED: Pension Issue Needs Greater Attention in Election

Send your Letters to the Editor to lauren.williams@patch.com

Bethel isn't exactly Greece, but it has a pension problem that is not getting much attention in the upcoming election.

It's not hard to understand why. Solving the problem means making difficult choices for our elected officials: raise more revenue (i.e., taxes) or cut benefits and alienate the town employee and labor union constituency.  

Fitch, the bond ratings agency, recently lowered its outlook on Bethel general obligation bonds, citing underfunding of the town's pension plans. A lower outlook could ultimately lead to a ratings downgrade and higher borrowing costs if the problem is not addressed.

According to a press release issued by Fitch on Oct., 4:

"Bethel's two single-employer defined benefit pension plans are underfunded at approximately 58 percent in aggregate. Under Fitch's conservative 7 percent investment return assumption, the general town pension plan is funded at 46 percent and the police pension is funded at 61 percent. The unfunded liability is partially a result of benefit changes earlier in the decade coupled with the town's chronic underfunding of its ARCs."

What could trigger a rating action: Managment's inability to develop and implement a realistic plan to address its pension funding situation, given its history of underfunding its annual required contribution and the plan's low funding ratios."

Also, worth noting is a ticking time bomb of sorts for Bethel taxpayers when the town does another property revaluation in a couple of years.

Property values have declined since the last revaluation in 2007, while the town's budget has increased every year. The bottom line: the town will likely have to raise taxes by double-digits down the road to offset lower property values. Fitch cites a 10 percent decline in town property values from 2009. So that could  mean the town would have to raise property taxes by around 10 percent just to maintain 2011 spending levels --  barring any major new additions to the tax rolls or a rebound in property values.

Let's hear what the candidates have to say on these issues. 

Emma Johnson
Bethel Resident 


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here