Stewart Rebuffs Democrats’ Call for Further Consideration of $115 Million Debt Plan

City Council Democrats called on Republican Mayor Erin Stewart to delay action on her proposal to borrow $115 million to push city debt into the future. The Council majority is seeking more public input and consideration of other options before re-structuring of finances and committing the city to long-term borrowing. While Democrats asked that the January 17, 2018 special Council meeting be delayed the Mayor ignored the request and gaveled the meeting to order, anyway, without Democrats.

The special Council meeting had been called one week after the January 10th special meeting, at which the Council had referred the borrowing and refinance plan back to a committee. At that meeting, Ald. Carlo Carlozzi (D-5) expressed the desire of Council members to explore other options than the one presented to them. “We are going to be looking at additional options. Instead of just this one plan, we are going to see what other plans are available.” Both Democrats and Republicans had voted together to return the measure to committee, and Stewart had spoken favorably about the further consideration of options.

But Stewart also effectively set a limit of one week on consideration, calling another special meeting to take up her proposal only one week later, on January 17th. Stewart has sought to pressure Democrats to approve her proposal. In a Twitter comment before the January 10th meeting, she said, “Big debt fixing plans on #New Britain city council agenda Wednesday night will newly elected dems save the city? Or will they let us fail.”

Democrats say that the additional refinancing options provided to them in recent days did not address key concerns that they had raised. But when Democrats asked for more time and consideration, Stewart called the January 17th special meeting to order without enough members present to form a quorum to conduct official business. Though the meeting could not officially convene, Stewart allowed Republicans to speak. Fuming at Democrats’ absence, Stewart called it a, “dereliction of your duty.”

But the Council’s President Pro-Tempore, Democratic Ald. Eva Magnuszewski (D-AL) said, “We asked for the meeting to be cancelled. Each of the 5 bonding restructuring plans adds at least $35 million dollars to the $380,134,000 we are being asked to refinance.”

“Is it fair to borrow this much from future generations?” Magnuszewski asked.

Democrats have expressed exasperation with Stewart’s policies of refinancing debt, saying that her past refinancing plans have increased the city’s total debt obligation from $302 million to $380 million. According to Democrats, Stewart’s latest plan would increase taxpayers’ debt obligation to $449 million.

“We made it clear we were not ready and find it disingenuous that the Mayor would try to proceed without us,” said Magnuszewski. “Most importantly, the public did not have an opportunity to weigh in on this.”

Magnuszewski added, “We did not have a consensus after receiving answers to our questions on Tuesday night.”

Under Stewart’s debt plan, city taxpayers would be making smaller payments on existing city debt in the current year and next eight years, with the largest savings being in the three years following the current year. After the year 2026, however, taxpayer payments on existing city debt would increase, becoming dramatically higher over the course of twenty-one years. The plan would add an additional ten years to the taxpayer’s payments on existing city debt.

From the city’s debt underwriter, Mesirow Financial.

Stewart has come under intense criticism for having pushed millions of dollars of debt into the future, to artificially lower costs during her administration, at the expense of higher debt payments for city taxpayers into the future. A graph from the city was obtained showed that this past “debt restructuring,” has resulted in a reduction in short-term debt payments and a spike in taxpayer debt payments in upcoming years.

Graphic shows New Britain’s escalating debt payments from debt restructuring. (Source: Municipal Budget Book)

Stewart’s opponent in the 2017 Mayoral election, Merrill Gay, had highlighted concerns about the effect of Stewart’s refinancing policies on the city’s future.

That appeared to be confirmed by John Healey, Stewart’s former Chief of Staff and a current Managing Director for the city’s debt underwriter, Mesirow Financial. In a presentation before the City Council on December 11, 2017, Healey admitted that, “A lot of what was said over the course of the campaign, as far as, you know, the city’s restructuring and the debt that, the debt spikes that are out there – that was absolutely true.”

Gay commented on Facebook on January 10th that, “For the 3rd time in three years, Mayor Stewart is proposing to refinance the city’s debt. Each time, it has been for one purpose, to get her through the next budget without a tax increase or major cuts.”

“What the mayor has done is the equivalent of paying the MasterCard with the Visa,” Gay commented. “When you can’t pay the debt you owe, the answer is not to borrow more money,” adding that Stewart, “borrows the money from our kids to spend it now.”

Editor’s Note (3/31/2018): The article was corrected to note that Mesirow Financial is the city’s debt underwriter.