To the Editor:

Contrary to the description in two Newtown Bee articles this week, the $519,000 bond premium that Newtown will receive from our recent $12 million bond sale is not a "windfall" and should not have been treated as such by the Legislative Council.

As we know, we have been experiencing a period of unusually low interest rates, 10-Year US Treasuries are yielding less than 2 percent.  As a result, bond purchasers offered us more funds than we were seeking to borrow, hence the bond premium. However, it was not free, it came with a cost.  We will be paying for it with higher interest payments over the repayment period of the bond than the market currently requires.

Therefore, Councilman Eide was on the right track, the bond premium should have been applied to the debt service account to offset the higher interest rates will be paying or reduce principal. As an-other prudent alternative, it could have gone to increase our fund balance as was done in 2012.

At our April 4th Board of Selectmen's meeting, I spoke very strongly against the recommendation that the first selectman and finance director ultimately made at the Legislative Council meeting and which the council voted to do, namely use the one-time revenue from the bond premium to pay for capital items in the selectmen's budget.  Although these are capital items, they are essentially recurring items that appear in our operating budget year after year. What they have done is only marginally different than what Republican state legislators are criticizing Governor Malloy for doing with the state's bond premiums.

I am particularly concerned about removing the very necessary $250,000 increase in the capital road line item. We have been seriously underfunding and neglecting our roads for many years.  A few years ago the selectmen decided to increase that line item by $250,000 per year to only get back to the $2 mil-lion that we were spending 10 or 12 years ago.  While it is true that we will still spend the $250,000 on roads this coming year, they have created a hole in our operating budget that will require increasing that budget by $500,000 the following year in order to reach the planned and needed minimum of $2 million for roads.

I believe that while the goal of reducing the increased tax burden is worthy, this method of doing so is not and could create a bad fiscal precedent that is only marginally better than borrowing to pay for operating expenses.

Sincerely,

Herb Rosenthal

70 Main Street, Newtown         April 8, 2016