Opinion: Bonding letter calls out for interpretation and correction
To the Editor:
Ms. Penkoff’s recent letter to this page calls out for interpretation and correction.
She spends four paragraphs telling readers that bonding artificially raises taxes, that we will (nevertheless) bond assets that will be acquired in the upcoming fiscal year because bonding “can be the best way to handle large expenses that have been ignored and accumulated over a period of time,” she takes a swipe at the current administration for ignoring the town’s five year capital plan, then admonishes both the town's and the schools’ administrations for employing the wrong priorities.
Let me explain.
By way of establishing credibility, I served on the Board of Finance in a nearby community for eight years, so I have a working knowledge of the issues Ms. Penkoff raises.
Bonding does not raise taxes, as she stipulates. Instead, it reduces them by spreading the cost of long life assets over their useful lives rather than paying for them in a single year's operating budget.
Then Ms. Penkoff misstates the reason enterprises issue bonds — not, as she asserts, because bonds “can be the best way to handle large expenses that have been ignored and accumulated over a period of time.”
Rather, bonding supports a multi-year capital plan under which a well managed enterprise makes annual investments to keep its plant and equipment up to date and in good working order - in contrast to what she states has been Trumbull’s practice.
Further, it is a maxim of business finance that long life assets are financed over their useful lives (bonded), not bought with cash through a single operating budget.
She takes the First Selectman to task for choosing the wrong priorities by under investing in our roads and not replacing equipment “before it became dangerous to the employees.”
And in a somewhat ironic comment, Ms. Penkoff admonishes the Board of Education for renovating our 30 year old dated and stuffed to the gills high school instead of investing in technology. Does she understand that the $66 million cost of the renovation will be entirely bond funded, and that not one cent will come out of an operating budget? Investing in technology and renovating a school are not either-ors.
But she closes with the ultimate irony — asking “should the residents be hit with a huge increase in their taxes to fix what has been ignored... I don't think so.”
So we just keep on ignoring?
Editor’s Note: This is a response to a letter than ran May 16, titled ‘Residents shouldn’t pay for poor decisions.’