Council Approves $8 Million For Debt Service

By Steve Bigham

The Legislative Council last week voted in favor of a debt service budget of just over $8 million for the fiscal year 2000-2001.

The debt service is up $636,000 over the current budget, according to Finance Director Ben Spragg. However, it could have been much higher when you consider the kind of borrowing scheme the town has in mind for the next three years. The borrowing plan would pay for $45 million in major capital projects ($30 million the first year, $15 million the second).

The debt service was originally unveiled at $9.3 million, but in an effort to keep this year’s tax rate increase down, Mr Spragg proposed spreading the town’s bond issue out over three years. His plan provides a reduction of $1.27 million or 0.75 mills in this year’s budget, but creates an increase in debt service of 1.1 mills next year, 1 mill the year after and 0.4 mills in the third year.

  “The actual borrowing would take place over two years, but would impact the mill rate for three years,” Finance Director Ben Spragg said. “The way it’s proposed is good because there are no spikes in the mill rate. It remains fairly level over the three years. It’s a combination of bonding and bond anticipation notes.”

Mr Spragg said the plan provides the kind of flexibility that the town needs to get through its current situation. That situation involves several large projects that must be accomplished within the next two years. The lengthy list of debt service items includes the proposed 5/6 school, Fairfield Hills purchase, Edmond Town Hall maintenance, ball fields, municipal space needs, and Hawleyville sewers.

Prior to the council’s debt service approval, Legislative Council Chairman Pierre Rochman made an effort to clear up any confusion about the town’s plan to pay for all these projects.

“The council has been raked over the coals for giving the public the impression that when we vote for bonding issues that we are promising certain things to happen. This debt service represents a 5/6 school, ball fields and other items,” Mr Rochman said. “I think it is important that everyone recognize that by voting for debt service, we are not committing to projects. We should anticipate doing them, but we are not sure of numbers as we only have estimates. We are putting debt service in the budget so if and when projects are approved, the money is available in the coming year to pay the debt service. It is important that people don’t come back and say it was promised because we voted for the interest. It is fiscally responsible to put money in debt service in anticipation of approximate numbers for certain projects we have discussed.”

The council also approved $750,000 for the maintenance of Fairfield Hills should the town purchase the property. The Board of Selectmen had originally recommended a line item in the amount of $1 million for maintenance purposes – a figure based on current annual costs of Tunxis Management, which has managed the campus for the state since its closing back in 1995. However, the council’s finance committee recommended reducing this amount by $250,000 since the town would likely own the campus for nine months instead of 12 during the next fiscal year.