March 8, 2001 |
2001-R-0312 | |
WATERBURY E-CERT BILL COMPARED TO PAST FINANCIAL EMERGENCY LEGISLATION | ||
By: Judith Lohman, Chief Analyst | ||
You asked for a comparison of the major conditions and requirements for bond issuance, financial oversight, local government functions, and other matters in the emergency certified bill for Waterbury (LCO 4532) with those the General Assembly imposed on West Haven, Bridgeport, and Jewett City when it authorized them to borrow money in prior financial emergencies.
Tables 1 to 4 below show the requested comparisons.
Table 1: Conditions for Issuing City Bonds to Finance Deficit
Waterbury LCO 4532 |
West Haven (SA 92-5) |
Bridgeport (SA 88-80, 89-23, 89-47, 90-31, 91-40)* |
Jewett City (SA 93-4) | |
Authorization |
● Aldermen may authorize, by resolution, up to $75 million in state-guaranteed deficit funding bonds and up to $50 million in interim notes ● Financial oversight board must approve deficit funding bond issuance in advance ● Board may authorize financing without city approval to avoid default on short-term borrowing or to pay off or renew interim deficit funding notes ● OPM secretary and state treasurer must approve issuance of interim notes in advance |
City council majority can authorize, by resolution, up to $35 million in state guaranteed bonds, with governor's written approval, for FY 1991 & 1992 deficits only |
● Common Council can authorize issuance of bonds & bond anticipation notes to cover up to 50% of specified fiscal year deficits until eliminated ● City cannot borrow money for other purposes during emergency period |
● Borough voters must approve bonds ● No dollar amount specified |
Terms and Conditions |
● Aldermen can delegate to mayor and city finance director power to set bond terms and conditions. If board issues financing directly, it can delegate these powers to one or more of its members. ● OPM secretary and state treasurer must approve terms and conditions in advance ● Maximum term – 20 years for bonds; 18 months (including renewals) for interim notes |
● Maximum term – 10 years ● Governor must approve any bonds with maturities greater than five years, whether or not backed by the state ● City council can delegate to mayor & board of finance power to set terms & conditions |
● Council can delegate to mayor power to set bond terms and conditions, subject to board's approval ● City can issue 20-year bonds and 12-month notes under terms and conditions set by mayor and approved by board |
No provision |
Assurances |
● State-backed SCRF ● Revenue intercept as required by SA 93-25 ● City must use bond proceeds to repay interim notes first ● City may agree not to withdraw money from SCRF that would reduce it below required minimum unless no other funds were available ● City may agree not to issue more SCRF-backed bonds if they would reduce fund below minimum ● State pledges not to limit or alter act guarantees until bonds are repaid, unless bondholders are protected |
● Revenue intercept & debt service fund ● State-backed SCRF ● State pledges not to limit or alter guarantee until bonds are paid off |
● Property tax intercept placed in an indenture of trust ● State-backed special capital reserve fund (SCRF) for up to $35 million ● City must affirm bondholders rights and benefits and use bond proceeds to repay notes first ● State advances funds appropriated to city for other purposes if it defaults on bond payments ● State pledges not to limit or alter act until bonds are repaid, unless bondholders are protected |
● Property tax intercept & debt service fund for obligations with terms more than 1 year ● State-backed SCRF, if state treasurer approves & OPM secretary & treasurer certify that bonds cannot be sold without one ● State pledges not to limit or alter act until bonds are repaid, unless bondholders are protected ● Trustee, after written request by holders of 25% of principal of outstanding bonds, can seek (1) mandamus to enforce their rights, (2) injunction to stop unlawful acts, or (3) acts that violate their rights, or bring action on the bonds |
State Investment in Bonds |
No provision |
No provision |
State can invest funds in notes |
No provision |
Table 2: Financial Review Board
Waterbury LCO 4532 |
West Haven |
Bridgeport |
Jewett City | |
Composition |
● 7 members ● OPM secretary or appointee (chair) ● State treasurer or appointee ● Mayor ● 4 gubernatorial appointees, one a Waterbury resident, one affiliated with a Waterbury business, one with financial expertise, and one chief executive officer (CEO) of a Waterbury municipal union recommended by a majority of Waterbury union CEOs |
● 7 members ● OPM secretary or designee (chair) ● State treasurer ● Mayor ● 4 gubernatorial appointees, at least one of whom represents organized labor |
● 11-members ● State treasurer, OPM secretary & mayor ● 2 gubernatorial appointees ● 2 mayoral appointees, 1 of whom is city resident ● 2 members of public, one appointed jointly by House speaker and Senate president pro tem and other jointly by House and Senate minority leaders ● 2 treasurer appointees, one of whom is city resident and the other organized labor representative |
● 1 Receiver ● Appointed by governor to one year term, renewable by OPM secretary |
POWERS | ||||
n Budget |
● Approve or reject ● Adopt interim budget, tax rate, and user fees if it rejects any annual budget ● Review & approve aldermen's appropriations transfers ● Require or make modifications if city fails to do so ● Require efficiency and productivity improvements to reduce costs and improve services |
● Approve or reject ● May adopt interim budget & tax rate if it rejects any annual budget ● Review & approve budget transfers ● Require city to take remedial action to improve operating results before end of FY 1991-92 |
● Approve or reject ● Adopt interim budget or modifications ● Certify modifications adding funds from unanticipated revenues to existing appropriation ● Approve all general and capital fund transfers before submission to Common Council ● Modify budget if city runs deficit or loses access to credit market |
● Approve or reject ● Adopt interim budget if borough fails to adopt budget or receiver disapproves it by beginning of fiscal year ● Modify budget if borough fails to do so when asked ● Review & approve budget transfers |
n Taxes |
● Approve annual tax levy ● Establish tax rate if city fails to adopt budget or board disapproves it by beginning of fiscal year ● Raise taxes if a deficit is projected and the aldermen fail to act within 30 days after receiving notice from the board |
Approve annual tax levy |
Approve budget's annual tax collection rate percentage |
Establish tax rate if borough fails to adopt budget or receiver disapproves it by beginning of fiscal year |
n Financial plan |
● Review & approve initial 3-year financial plan and all subsequent modifications ● Establish plan if city fails to do so or board rejects city plan ● Regularly examine financial plan & city budget & require city to make modifications ● If city fails to make modifications, make them itself |
● Review & approve initial 3-year financial plan and all subsequent modifications ● Regularly examine financial plan & city budget & require city to make modifications |
● Approve plan & modifications, certify revenue estimates, and conduct compliance audits ● Modify plan if city runs deficit or loses access to credit market |
● Prepare 3-year plan for OPM secretary approval ● Modify plan if borough fails to do so when asked |
n Borrowing |
● Review & approve deficit funding bonds and other city borrowing ● Approve terms & conditions for bond anticipation notes ● Approve SCRF creation |
Review & approve deficit funding bonds |
● Approve bond issuance ● Review bond ordinances & resolutions for issuances over $250,000 ● Approve delegation to mayor of Common Council's power to set terms and conditions ● Approve terms & conditions for bond anticipation notes ● Approve SCRF creation |
● Review & approve all borough obligations ● Establish property tax intercept, debt service fund, & SCRF |
n Collective Bargaining |
● Approve or reject all agreements or amendments, indicating specific provisions rejected ● For a new agreement, review entire contract, not just negotiated elements, in making decision ● Approve or reject revised agreements ● Stipulate new, binding agreement if parties unable to revise or board rejects revision ● Impose binding arbitration after 75 days of negotiation & act as binding arbitration panel ● Ask unions to reopen existing contracts ● If the union agrees, negotiate the revision for up to 28 days. If the parties agree, revision takes effect subject to ratification ● If parties fail to agree or union declines to negotiate, the board's proposed revision is subject to a vote by bargaining unit members ● If a majority of bargaining unit members vote in favor, the revision takes effect; if not, existing contract remains in effect. Vote is final. ● Appoint or approve the city's chief collective bargaining negotiator |
● Approve or reject all agreements or amendments, indicating specific provisions rejected ● Review entire contract, not just negotiated elements, in making decision ● Approve or reject revised agreements ● Stipulate new, binding agreement if parties unable to revise or receiver rejects revision ● Impose binding arbitration after 75 days of negotiation & act as binding arbitration panel |
● Identify proposed agreements' impact on budget and plan ● Comment on fiscal impact of proposed agreements in binding arbitration |
● Approve or reject all agreements or amendments, indicating specific provisions rejected ● Review entire contract, not just negotiated elements, in making decision ● Approve or reject revised agreements ● Stipulate new, binding agreement if parties unable to revise or receiver rejects revision ● Impose binding arbitration after 75 days of negotiation & act as binding arbitration panel |
n Other Contracts |
● Review and approve new or renewal contracts worth more than $50,000 ● Set aside any contracts not authorized according to state & local law ● Set aside any contracts not in the public interest if the city will suffer no substantial penalty |
● Review and approve contracts worth more than $50,000 ● Set aside contracts not authorized according to state & local law |
● Review contracts above specified amounts for compliance with plan ● If city runs deficit or cannot obtain credit, reject proposed contracts if inconsistent with plan ● Approve all contracts if there is a deficiency after a specified date or the city loses access to credit market during or after emergency period |
● Review & approve ● Set aside contracts not authorized according to state & local law |
n Property |
Approve asset sales |
No provision |
No provision |
Purchase, sell, or transfer real & personal property or other assets with OPM secretary approval |
n City Officials |
● May order city officials to implement its decisions ● Attorney general may apply for mandamus or injunctions on board's behalf to carry out board's orders ● Board may override any city decision affecting the city's economic viability, including personnel and administrative hiring decisions |
● May order city officials to implement its decisions ● Attorney general may apply for mandamus on board's behalf to carry out board's orders |
● Review & report on operating & management efficiency & productivity ● Apply, through state treasurer, for mandamus ordering city officials and employees to carry out board's orders |
● May order officials to implement receiver's decisions ● Attorney general may apply for mandamus or injunction to require implementation of receiver's decisions or property tax intercept, debt service fund, or SCRF |
n City Employees |
● May appoint emergency manager for city's financial and administrative affairs ● City officials and employees who violate bill subject to administrative discipline, including suspension and removal. City employees retain all legal and contract protections. ● Retain outside financial, legal, & other consultants |
● May appoint emergency financial manager to manage city's financial affairs ● Pursue legal action against any officer or employee for spending more than budgeted appropriation |
No provision |
● Supervise borough employees ● Hire, fire, & set terms of employment ● Pursue legal action against any officer or employee for spending more than budgeted appropriation ● Retain outside financial, legal, & other consultants |
n Other |
● May review & approve education budget on a line-item basis ● May require board of education to submit budget transfers ● Require city to implement required property tax revaluation and monitor compliance ● Require city to make actuarially recommended pension contributions and monitor compliance |
● May review & approve education budget on a line-item basis ● May require board of education to submit budget transfers |
None |
● Formulate borough recovery plan |
Termination |
When city budget operating funds have been balanced for five consecutive fiscal years and board has approved positive operating budgets for three successive fiscal years |
When city budget operating funds have been balanced for two consecutive fiscal years and board has approved positive operating budgets for three successive fiscal years |
6 months after emergency ends |
● June 30, 1995 or 6 months after retiring bonds authorized by act or ● After 3 years of balanced budgets and projection of 3 years of positive fund balances |
Reactivation |
If, while state- guaranteed borrowing under this bill or 1996 special act is outstanding, city: ● incurs annual general fund operating deficit more than .5% of most recently completed annual budget, ● fails to fund pensions as recommended, ● fails to implement revaluation, or ● fails to fund internal service accounts enough to avoid deficits. |
While state- guaranteed borrowing is outstanding, if city incurs annual general fund operating deficit more than .5% of most recently completed annual budget. |
If deficit reoccurs while bonds issued under act are still outstanding |
If audit finds annual operating deficit more than .5% |
Table 3: Explicitly Required Local Government Obligations
Requirements |
Waterbury LCO 4532 |
West Haven |
Bridgeport |
Jewett City |
Financial Plan |
Prepare 3-year plans & modify as directed by board |
Prepare 3-year plans & modify as directed by board |
● Annually prepare & modify 3-year plan for eliminating deficits and addressing related matters |
No provision |
Budget |
● Prepare and submit annual budget ● Modify as directed by the board |
No provision |
● Prepare & submit budgets that include only sums board certified ● Forecast annual tax collection rate percentage based on the average annual rate for the 3 prior years ● No increases to appropriated amounts except as allowed |
Expenditures prohibited before receiver approves budget |
Revenues |
Provide reports, data, audits, etc. as requested |
Provide reports, data, & other records as requested |
● Assess & levy property taxes needed to fund budget ● Revenue derived from sales of assets and other nonrecurring sources must be applied as the act specifies |
No provision |
Fund Transfers |
● Board approval required for appropriations transfers ● Board may require submission of education budget transfers |
No provision |
● No transfers of operating funds to a bond funded capital project without increasing amount authorized in bond ordinance ● No transfers permitted from bond funded projects |
No provision |
Contract Limitations |
● Must have board's prior approval if costing more than $50,000 in any fiscal year ● Amounts cannot exceed those budgeted |
No provision |
● Must obtain board's prior approval ● Amounts cannot exceed those in financial plan |
No provision |
Personnel |
By June 30, 2001, aldermen must submit to board a plan to reduce the annual cost of existing noncivil service managerial, administrative, and contractual employees by at least 10%. Aldermen must implement original or board-modified plan by 10/1/01. |
No provision |
No provision |
No provision |
Table 4: Other Provisions
Provision |
Waterbury LCO 4532 |
West Haven |
Bridgeport |
Jewett City |
Court Appeals |
Provisions found unconstitutional do not affect other provisions |
No provision |
● Parties can appeal Superior Court decisions invalidating act's provisions to Supreme Court ● Provisions found unconstitutional do not affect other provisions |
No provision |
Acceptance of Act |
Aldermen accept the act by approving bond issue |
No provision |
No provision |
Borough voters accept act by approving bond issue |
Bankruptcy |
Bankruptcy declaration barred without governor's written consent while state guaranteed borrowing is outstanding |
Bankruptcy declaration barred without governor's written consent while state guaranteed borrowing is outstanding |
No provision |
Bankruptcy filing prohibited |
Supplemental Tax |
● Aldermen can levy if original rate is insufficient to cover current expenditures ● Board can impose levy if aldermen fail to do so within 30 days |
City council may impose at any time when revenues are insufficient to pay current expenses. |
No provision |
Receiver can levy if original rate is insufficient to cover current expenditures |
Liability |
● State officials & board not liable, except for wanton, willful, or malicious acts |
● City employees & officials are personally liable when they spend more than the appropriated amounts ● State officials & board not liable |
Board members & their agents immune from liability when exercising powers under the act |
● City employees & officials are personally liable when they spend more than the appropriated amounts ● State officials & receiver not liable |
Revaluation |
State must fine city if it fails to implement required revaluation for 10/00 grand list or later list |
No provision |
No provision |
No provision |
Grant Advances |
City to receive advance payments of balance of FY 2000-01 ECS and Pequot Fund grants. |
No provision |
No provision |
No provision |
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