Finance Director: Local Bonding, Refunding Plans In Flux
UPDATE: This report was updated at 1:30 pm on March 27 with new information not included in the weekly print edition about plans to offer Newtown Municipal Bonds.
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Recent volatility in the stock and bond markets temporarily halted Newtown Finance Director Robert Tait’s plans to issue municipal bonds, as well as refunding a number of other existing bonds this week. He said he is now planning the scheduled bond sale on April 2.
Tait told The Newtown Bee March 25 that his decision to hold off on the bond sale was mirrored by other municipal leaders across the state who were concerned higher than optimal interest rates would result in excessive debt service costs that would further burden local taxpayers.
Instead, the local finance director is using Newtown’s fund balance to finance things like road repairs and the new police station construction. Tait said since the bonding was already authorized in the 2019 budget referendum, once the markets and bond rates stabilize, he will use bond funds to offset the money tapped from the fund balance.
The town also has the option to use Bond Anticipation Notes or BANs to fund capital projects in lieu of issuing bonds at unfavorable rates. But, Tait explained that BANs also come with added costs.
Similarly, the market volatility is causing Tait and Newtown’s financial advisors to scrutinize daily trends to ensure the refunding on $20 million of existing bonds will generate savings of $748,000 or more.
While daily swings in the market at one point in recent weeks could have generated more than the minimum anticipated savings, as of March 25, those anticipated savings were below the minimum benchmark the finance director set.
“We’re prepared to launch the refunding on any given day when the savings hit that $748,000 mark, but we could still see that savings go higher,” Tait said. “We’re evaluating that on a day-to-day basis, but today, we would not see that level of premiums if we were to refund.”
The finance director is also maintaining the current Grand List projection outlined in the 2020-21 municipal budget proposal, which currently telegraphs a windfall just under $1 million. The grand list represents all taxable properties in a municipality.
Tait said letters scheduling Board of Assessment Appeals hearings are going out now, and he would have a better idea of exactly how much of a net grand list increase will prevail once those hearings conclude and the actual revenue amount is recalculated.