More debt is not the answer for Greenwich

FI-Letter-to-the-EditorTo the Editor

Sean Goldrick, Democratic member of the Board of Estimate and Taxation, advocated in his column last week once more that Greenwich should increase its debt burden in order to pay for various investment projects. As any family knows, it’s easy to get into debt and hard to get out of it.

The number of municipalities that have gone into a lot of debt is very high and the reason is clear. It is the easy route. But what they discovered once the debt was on the books is, “Oh my! How do we get out from under this burden?” This will be especially true if interest rates start rising and the debt service takes a bigger and bigger slice of the annual budget.

I have an 8-year-old son at Julian Curtiss. Burdening him today with debt that we incurred while he was a kid that he must pay off when he is an adult would be totally irresponsible. It takes character to stay out of debt. It is not the easy way to live. But because Greenwich applies the pay-as-you-go rules, I bought a house here.

It was a substantial chunk of money up front, but I wanted to buy into the fiscal discipline of Greenwich. I recognize that there are numerous projects in town that require funding, but why don’t we invest in care and maintenance instead of rebuilding? One rule we have in our family is that if we take care of things, they last longer and we don’t need to replace them so quickly.

On the other hand, Mr. Goldrick’s proposal to separate portfolio management from the administration of the pension fund makes sense to me as a finance professional. That the town’s pension fund has huge unfunded liabilities and is underperforming relative to the public pension fund universe is incomprehensible when the S&P 500 index is at an all-time high. The argument that diversified portfolios have caused this is not a valid argument, as professional portfolio management would certainly have corrected underperformance in certain portfolios with proper adjustments in asset allocation.

 

Jean-Jacques Illi
Greenwich

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