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Vol. LXV, No. 7
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Wednesday, February 16, 2011
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Vol. LXV, No. 7
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Wednesday, February 16, 2011
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The Borough received a briefing on its debt management plan at the Council meeting last week, which showed that the municipality is in sound fiscal shape with respect to its spending on major capital projects.
The debt management plan includes $2,013,000 for the maximum amount of the Borough’s share of the community pool project. Administrator Bob Bruschi noted that when the project has been fully financed, it would cost approximately $146,000 per year in debt service, and that for every reduction of $100,000 in debt on the pool, the annual debt service savings would be reduced by $7,300.
“This number is in the capital budget, and it is a project you can sustain if you are comfortable doing the project,” Mr. Bruschi said of pool financing, adding that he was “very confident” that funding the municipality’s one-third share of the pool would not be strenuous. “We have done a very good job of managing our financial services,” he admitted.
Having a strategy in place for managing the debt is something the Borough has employed for the past 20 years, with the most recent method put in place in 2004. A spending plan is set aside for major capital projects, and the municipality agrees upon a debt ceiling, or the maximum capacity of debt at any given time.
Integrating new debt into old debt being retired is part of the plan, as is monitoring unspent balances. The Borough reviews the annual capital requests coming from various municipal departments and those that are jointly held, and project the anticipated spending for major expenses in future years.
“Our capital budgets are significantly higher than what we actually spend,” Mr. Bruschi noted.
Over the past four years, the Borough has averaged spending $3,022,399 on major capital projects, which includes road and sidewalk maintenance, sewer projects, fire and police department equipment, and public works items. Other capital spending is integrated into this plan to account for increased expenditures in a given year.
Although not included in the debt management plan, non-tax supported dollars also contribute to capital improvements. For example, the state’s Environmental Infrastructure Trust, which finances projects at low or no interest rates, contributes to “saving hundreds of thousands of dollars” for the Borough, according to Mr. Bruschi, who said that improvements made to municipal parking apparatus in town are all self-liquidating.
“It is critical to take a long-term approach when looking at this,” Mr. Bruschi said. “Currently, if you wanted to take the $3.4 million in debt service and trim it down by 10 percent, it would not be an easy thing to do quickly.”
In 2006, the debt service was 16 percent of the municipal operating budget, whereas in 2010 it is about 14 percent. The Borough’s debt capacity is at 1.8 percent of its total equalized value, while the maximum percentage allowed by the state is 3.5 percent.
Regarding funding the pool this year, Mr. Bruschi assured Council that no reductions have been made to the projects the Borough would normally spend money on.
Council member David Goldfarb said that “the debt management plan has accomplished what we wanted to do,” adding that the process could be made better by projecting the plan for several years into the future, and better communicating with the people and departments who are making the capital budget requests.
Barbara Trelstad, also of Borough Council, requested an annual review of the debt management plan, while Roger Martindell noted there were still “a number of practical and policy decisions to be made” regarding pool funding and whether the cost of building the new pool complex would lead to an increase in user fees.
Calling for looking into a revolving fund for recreation in town, Mr. Martindell suggested longer-term planning on the issue.
Community pool funding comes up for a vote at the open public meeting of Borough Council on February 22 at 7:30 p.m. at Borough Hall. See princetonboro.org for the agenda and further details.