Federation of Connecticut Taxpayer Organizations

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June 27, 2012

From Susan Kniep President

The Federation of Connecticut Taxpayer Organizations, Inc.�

Website: http://ctact.org/
Email: fctopresident@aol.com

Telephone: 860-841-8032

Breaking News

Stockton to file for bankruptcy, will be largest US city to fail

The Stockton City Council halts bond payments, slashes employee benefits and adopts an emergency budget as mediation ends. The Central Valley city becomes the largest in the U.S. to seek bankruptcy protection.

Experts say there are no clear answers to what comes next for Stockton or how its fall will affect the rest of the state. Other cities hit hard by the housing bust and state budget crisis are negotiating with employee unions for concessions and are watching to see if municipal bankruptcy proves medicine or poison.

The stated purpose of AB 506 � to forestall a municipal bankruptcy � failed, but several bankruptcy attorneys said the mediation may help Stockton avoid the string of lawsuits that faced the smaller city of Vallejo, which recently emerged from a bankruptcy case filed in 2008.

How Stockton found itself so mired in debt can be seen everywhere in the city's core. There is a sparkling marina, high-rise hotel and promenade financed by credit in the mid-2000s, mere blocks from where mothers won't let their children play in the yard because of violence. Read entire article at �.. http://www.latimes.com/news/local/la-me-stockton-bankruptcy-20120627,0,2285815.story

News: Stockton bankruptcy will make history; residents reeling

Find Information on Municipal bankruptcies, filings and public pensions at the end of this publication.�

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The Aforementioned Should Serve as a Wake Up Call for Connecticut�s Governor and State Legislators� Who are On a Wild Spending Spree with Taxpayer Money!�

As Well As Local Public Officials Who Rely Upon State Aid to Offset Property Taxes in Connecticut�s 169 Towns!

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State Debt:� $71.6 Billion!

State Employees: Job Guarantees,�

9% Wage Increase!

Millions of CT State Taxpayer $$$ Continue to be Awarded for Speculative Economic Development Projects!�

$115 Million + $60 Million CT Dollars Included Within

Public Act No. 12-147 - Summary for Public Act No. 12-147

This Act � Which Has Received Little Recognition from the Press - Establishes A New State Quasi-Public Agency, entitled Capital Region Development Authority (CRDA), which can undertake development activities within the �Capital Region� comprised of� The City of Hartford, Bloomfield, East Hartford, Newington, South Windsor, West Hartford, Wethersfield, and Windsor and�� (1) develop and redevelop property anywhere in Hartford, (2) develop riverfront improvements anywhere in Hartford and East Hartford, (3) demolish and redevelop vacant buildings in East Hartford, and (4) develop more housing units��

If you live in one of the towns referenced you should read the Act in its entirety and determine the power of CRDA over� development in your town and possible impact on your home or business.� If you live in a Town not referenced within the Act, you should determine if a similar plan is on the drawing board by the State for your town or region.��

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Connecticut Taxpayers and Property Owners:

It�s time we looked at the State of our State!

Property owners in Connecticut should be concerned with the fiscal climate of Connecticut.�� The Governor and State Legislature are spending money we don�t have on speculative development projects while legally binding union contracts are in effect which require taxpayers to fund 9% wage increases while guaranteeing state employees their jobs.� If the Governor needs money while these contracts are in effect, municipal aid could be reduced which could, in turn, drive up property taxes within Connecticut�s 169 towns.�� Consider the following,�

In October, 2011 it was reported that 'Connecticut Has The Nation's Highest Tax Burden' - Weston ...

This month CTMirror.org reported in their article captioned Cash flow report sparks fears state may need to borrow to pay bills ... on time that state Treasurer Denise L. Nappier in her monthly report to the Finance, Revenue and Bonding Committee noted ��pressures on the state's cash flow continue to mount.� �There has been a �significant decline� over the past 12 months�..The balance stood at $121 million on May 26, down from $895 million at the same point in 2011.�

As noted within the following captioned 10 States With The Highest Debt Per Person: Report Connecticut leads the nation in the highest debt per capita at $5,402.�

Our State�s latest� Fiscal Accountability Report on page 16 details the State�s debt of $71.6 billion.� Taxpayers owe� $30 Billion for State Employee and Teacher Retiree Healthcare and $21 Billion for State Employee and Teacher Pensions.�

On June 22 it was disclosed by CTMirror.org that State retiree health care funds remain in cash pool used to cover operating bills .�� It was reported that �The legislature's nonpartisan Office of Fiscal Analysis noted that nearly $50 million set aside for retiree health care -- half of which was contributed by employees -- currently earns 1/10th of 1 percent in annual interest in the common pool. But the most recent actuarial analysis for the retiree health care trust fund calls for average investment returns of 5.7 percent over the next few decades.�� Here is the analysis.��

Six months ago it was reported�� MOODY'S DOWNGRADES STATE OF CONNECTICUT GENERAL ... OBLIGATION BONDS stating �The rating downgrade is based on Connecticut's high combined fixed costs for debt service and post employment benefits relative to the state's budget; pension funded ratios that are among the lowest in the country and likely to remain well below average; and depleted reserves with slim prospects for near-term replenishment. �Connecticut's state employees retirement system (SERS) and teachers retirement system (TRS) had funded ratios of 44% and 61%, respectively, as of June 30, 2010.��

This month headlines read Report: Connecticut was among nation's worst at saving for public benefits.� �Keith M. Phaneuf noted that �With states' savings for employee retirement benefits at an all-time low, Connecticut ranked among the worst of the worst in 2010, according to a new report this week from the Pew Center on the States. �Reeling from recession-driven investment losses, a pension raid to prop up state finances and a history of not saving for retiree health care, Connecticut government had more than $71 billion in liabilities and less than $24 billion set aside to cover them two years ago.� Click to view the latest report.�

Connecticut�s Bonded Debt is $19 Billion and growing with every vote by the State�s Bond Commission as they approve many speculative projects to include a $100,000 grant for a company sponsoring paintball competitions.� However, Welfare for business may not bring jobs as noted by the Day of New London� which reported that �So far the state has handed out $6.08 million in loans and $4.8 million in grants to about 70 small businesses. �With $100 million to work with, there will be many more. �But if there is a strategy to this, outside of giving out a lot of money to generate a few jobs at many different places, it is difficult to discern.�

In May, it was reported within the article captioned When jobs don't follow dollars - Connecticut Post by Bill Cummings, Investigative Reporter, that �Connecticut has bestowed more than $500 million on businesses in loans and tax credits over the last decade to create and retain jobs, but many of the deals have not produced the promised jobs, and penalties assessed by the state when goals are missed are usually small.�

In Providence, Rhode Island taxpayers learned what can happen when $75 million in loan guarantees are bestowed upon a company which then files for bankruptcy protection as noted within Game over: Ex-Red Sox pitcher Curt Schilling's company files for bankruptcy; feds investigate

And questions abound when reviewing Public Act No. 12-147 which includes the The City of Hartford, Bloomfield, East Hartford, Newington, South Windsor, West Hartford, Wethersfield, and Windsor which have been linked through a newly formed Quasi-public agency - the Capital Region Development Authority (CRDA) - with broad powers over development and �the authority to issue bonds�giving� CRDA authority over millions of state taxpayer dollars.�� Homeowners and businesses in the Towns referenced within this act should determine how broad the authority of CRDA is and its potential impact on their own property and community.�

They should determine how CRDA would carry out its mandates as described within the� Summary for Public Act No. 12-147 which includes �demolish and redevelop vacant buildings in East Hartford�? Could this mandate be extended to other towns?� Could the power of CRDA override an owner�s intent to retain�� his well maintained vacant building? Could CRDA take possession of the building through eminent domain even if there is no blight on the property?� Enter State Statutes:� Sec. 12-65d. Designation of rehabilitation area. Criteria for deferral of assessment increase. And Sec. 12-65e. Agreements to fix assessments during, and defer increases following, rehabilitation or construction. Required provisions.

� A Rehabilitation Area is defined by the State as �deteriorated, deteriorating, substandard or detrimental to the safety, health, welfare or general economic well-being of the community.�� So a municipality declares their entire town or a section of their town a Rehabilitation Area which then falls under this blight designation.�� And this is exactly what East Hartford is now attempting to do in areas of the Town where there is no blight. Previously, they attempted to apply this statute to the entire town. ��

Within the Summary for Public Act No. 12-147 it is noted �The act extends by four years, from June 30, 2013, to June 30, 2017, the deadline for the State Bond Commission to issue up to $115 million in state general obligation bonds for DECD to fund specified projects (�22). The projects are the civic center and coliseum complex reconstruction, riverfront infrastructure development, housing rehabilitation and new construction, demolition and redevelopment, and parking. (PA 12-189 authorized additional bonding for CRDA (see BACKGROUND)).�

�PA 12-189, An Act Authorizing Bonds of the State for Capital Improvements, Transportation, and Other Purposes, authorizes up to $60 million in bonds for CRDA to encourage new housing in downtown Hartford.�