Town meeting is this coming Saturday, the 24th. The big issue that has come out so far, not surprisingly, is the request for a new ladder truck for the fire department. Generally speaking, from what I saw a the informational meeting the issue is less about it than whether this happen this year or next and how should it be paid for. Of those two the issue taking up the most time was how to pay for it. I concede that I brought that up.
The Selectboard’s recommendation is to use $450,000 of surplus reserves and borrow the other $500,000 for the total $950,000 anticipated price. If we do borrow the price becomes $1,018,000. The additional $68,000 is the interest on the bond, or loan as the average person might understand it. The loan spreads the payments out over ten years. Is it worth $68,000 to spread out the cost?
The Town, in this budget, is spending $1,440,000 this year in debt service (principle and interest). That’s about 8.1% of the budget. As a former Finance Committee member I understand this figure as not low but not in the danger zone either. What 8.1% means is that, for someone paying about $5,500 a year in taxes about $440 of that is used to retire debt.
Avoiding the $68,000 interest cost, which I regard as money down the toilet, requires paying for the truck in cash which in turn requires raising the tax rate for this year only(not ten years) 4 cents. The Selectboard says the taxpayers cannot afford that. They present no evidence, no formula and no data to back up that assumption. It’s just what they “feel.” They are confident that once the RTM reps know how they feel they will support them. Evidence, they seem to believe, will only create questions and increase risk of rejection.
According to the 5 year capital plan there will be a $1,000,000 expense (a bridge) in three years and the year after that a $2,000,000 infrastructure cost, a modernized DPW main building. Given that it feels necessary to the Selectboard to bond for $500,000 now it can and should be assumed they will bond for both of these latter expenses. The Town Manager agreed to supply for RTM a 5 year debt plan for us to see where total debt will be in five years.
A thought experiment of mine is, with 20 years of RTM experience behind me, to imagine the ensuing debate if someone stood up and, after noting the very high rate of poverty in Brattleboro, made an motion to add $68,000 to social services. Money that would at least be yielding something in return. People would be jumping out of their seats. Where would we get THAT kind of money?
Borrowing money doesn’t lower taxes. It increases them by the amount of interest paid. It hides the increase by spreading it out. It makes the increase seem negligible when it is spread out. But at the end of the day we find, in this year’s budget, almost one and a half milliion dollars of debt service payments.
High debt often increases interest rates because banks believe there is more risk. Debt place heavy constraints on budgeting and financial planning.
Income sensitivity and the circuit breaker are two state tax programs that offer some tax protection (reduction) for middle and lower income taxpayers.
It would be best to vote no on Article 11 (borrowing) and yes on Article 12 (use the surplus reserves as recommended). This sends the message that the people want the fire truck but to buy it with cash raised from a one year 4 cent tax increase.