News the leading municipal credit agency in the country has put the city on a “watch list” has provided the latest battle between Mayor Edward M. O’Brien and endorsed Democrat-endorsed candidate Nancy Rossi. Rossi said O’Brien was “solely responsible for the downgrade, and said the news only points to the need for a change in City Hall. The mayor, meanwhile accuses his opponent of fear-mongering.
West Haven was one of nine Connecticut municipalities across the state that was warned and put on a “Credit Watch List” resulting in an outlook downgrade by Standard & Poors (S&P) last week. West Haven was rated BBB stable and is now downgraded to BBB watch negative. West Haven’s bond rating is the second lowest in the state behind Hartford. In a press release this week, Rossi put the blame squarely on O’Brien.
“Mayor Ed O’Brien is solely responsible for this negative outlook because he inflated the budget numbers for state revenue by $8 million and spent it recklessly,” said Rossi. “He was warned by me and others and he ignored us. His actions were inexcusable and it proves again that he is unfit to manage West Haven and does not understand budgeting and finance. This budget went in by default, some of his allies didn’t vote for this budget.”
She said the recent approval by the City Council and mayor of $150 million in new borrowing for the West Haven High School rebuild and paying down the city’s estimated $16 million deficit are jeopardized because of the new designation.
“West Haven has the only negative budget reserve in the state (-$16 Million), the second-lowest bond rating, more projected budget deficits, a governor that declared West Haven nearly insolvent and now a negative financial outlook from S&P, which may cripple future borrowing or at the very minimum will significantly increase the cost to taxpayers because of higher interest rates,” she said. “We cannot continue operating and conducting business in this manner. We all deserve better.”
O’Brien meanwhile, said his opponent’s fear-mongering is just part of a pattern.
“On Dec. 23, 2016, The New Haven Register wrote an article entitled “Moody’s Says Rossi’s Bond Rating Claim About West Haven a Little Off”. It feels like that critique can be applied to everything that Nancy Rossi says, “O’Brien responded.
“First of all, West Haven’s bond rating has not changed. Multiple cities and towns were placed on a watch list due to the uncertainty of the state budget, not because of actions on the municipal level. We are fighting every single day to make sure West Haven is made whole in the final state budget,” he said. “Additionally, the original estimate for increased state funding in the new budget was nearly $14 million. To be conservative, we only included about $5 million of that in our budget this year. This was the same action taken by many cities and towns. There is an unfortunate and unavoidable amount of risk that comes with having to pass a city budget before a state budget is in place.”
The mayor said his opponent need only look at her own decisions of the past to understand why the city is in the financial straits it is.
“Thanks to Nancy’s failure to take sound advice, we are now deficit bonding to eliminate the city’s long-standing deficit when we could have refunded the bonds and used cash flow to eliminate the deficit in 2014. Nancy has long been part of the problem in this city. She has never been part of a solution,” he said.
The mayor said the steps to eliminate the deficit and finance the high school will have a longterm positive impact on the city’s credit rating.
”These are steps recommended to us by auditors and various municipal finance experts, all of whom are more qualified to deal with these issues than Nancy Rossi,” O’Brien said. “These experts also look favorably upon the fact that my administration has paid off nearly $30 million in long-term debt.”
He said the statements made by his opponent are more of the same.
“Once again, Nancy Rossi is resorting to scare tactics and misleading statements to cover for the fact that she has no plan for West Haven. Where are her solutions to the issues she raises? Where would she cut millions of dollars from our budget? Would she raise taxes to make up any change in state aid? She has yet to answer a single one of these questions,” he said.