Date: Fri 08-Jan-1999

Publication: Bee

Author: STEVEB

Quick Words:

finance-debt-Spragg

Full Text:

Newtown's Debt Is On The Rise

Moodys Investor Service starts getting nervous when towns start borrowing too

much money. The rating on municipal bonds for towns that are overextended can

slip, and red flags start to go up when a town's net debt payments exceed 10

percent of overall expenditures.

Newtown's net debt payment last year totalled $5.1 million, nine percent of

the entire budget. The town's gross debt payments actually exceeded $7 million

(13.6 percent), however, the state reimbursements reduced that cost by $2

million.

Newtown is still hovering below the 10 percent mark, but Finance Director Ben

Spragg is concerned it may not be able to stay under for long. He is currently

crunching numbers to see how much more money the town can get away with

borrowing.

"I expect it to go up, but I'm still working on that," he said Thursday

morning.

Newtown's total bonded indebtedness as of this week was $52 million, which

does not include $16 million worth of municipal sewer bonding to be paid off

by sewer users. Of that $52 million debt, $14 million is to be paid off by the

state. Newtown's largest debt in history was in 1996 when Mr Spragg floated a

bond for the $28 million renovation and addition to Newtown High School.

Newtown's debt drops each year with its principal payments.

Moodys specializes in setting the credit ratings for municipalities and large

businesses.