Ok here’s the problem, you are in a financial hole you owe a large sum of money, do you make the full payment due or do you make a partial payment and allow the hole to go deeper? Maybe that is a hard concept, so let me put it another way, you are digging a hole next to Coventry Lake and suddenly the water starts to drain from the lake into your hole which then slowly leeches out into a stream. Do you stop digging or do you continue to dig at a slower rate and allow the lake to drain out?
Now I think most of you will come to the same conclusion you STOP DIGGING! Now let’s say you are on the Coventry Town Council and the pension committee tells you there is a big hole in pension funding and you need to deposit $160,000 per year for ten years to fill the hole. You have a decision to make do you put the money into the pension account or do you only put in $99,000? You are aware that if you do not make the full payment now, you will at some time in the future still have to make up for and pay those funds into the pension account.
Do you stop digging the financial hole or do you do what your Town Council did, vote for the lower payment that only makes the partial payment and allows the hole to continue to grow? It’s a good thing the Town Council is not digging the hole by the lake mentioned above or they would keep digging and allow the lake to drain.
When it comes to financial responsibility the wise and prudent thing to do would be to pay off what you owe before you continue new spending. The Town staff of Coventry has many long-term employees nearing retirement age; they will soon be deducting money from the account. If at some point deductions exceed the annual income it will reduce the amount invested and lower the return thereby increasing the debt to the taxpayers. Kicking the “financial can” down the street for a future date was not in the best interest of the taxpayers. The pension fund should receive a higher priority.
To his credit Town Council member Richard Williams spoke in favor of fully funding the pension payment. Unfortunately the majority on the Town Council did not agree so the pension funding did not receive the entire amount recommended by the Pension Committee. It is just another example of pay now or pay more later; in this case we will pay more later.
Crafting a budget is a lot easier if you just ignore what you owe and put it off until tomorrow. It didn’t work in Hartford and Governor Malloy is now facing a huge financial decision. It will not work in Coventry just as it does not work in your own household.