Financing Plan Seeks To Smooth Impact Of Projects

By Steve Bigham

Newtown Finance Director Ben Spragg has come up with a plan designed to help Newtown pass through a period of accumulating expenses without drastically affecting the local property tax rate. The challenge is to allow the town to take on several large projects that must be done 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.

Mr Spragg is confident that his plan will work. It entails taking an extremely aggressive borrowing plan and tempering it with sound financial planning based on the timely issuance of bonds.

Legislative Council member John Kortze works closely with Mr Spragg as chairman of the finance committee. He can’t imagine Newtown facing this crossroads in its history without the benefit of Ben Spragg’s expertise.

“Ben is remarkably middle of the road and an irreplaceable asset to this town,” Mr Kortze said. “He does a fantastic job in dealing with the demands and personalities of the current body of elected officials.”

The town is about to double its debt from $48 million to $94 million, which will raise the town’s debt as a percentage of the total budget above the 10 percent threshold. Moody’s Investment Services recommends towns not borrow above the figure. However, by spreading the town’s bond issue out over three years, the Legislative Council was able to reduce this year’s massive debt service from $9.3 million to $8 million. This 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,” Mr 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.”

Nevertheless, the town is still facing a 2.9 mill increase or what amounts to a 10.3 percent growth in the current budget. The proposed $69 million budget is the largest budget increase in at least 10 years.

The following are municipal budget increases during the 1990s as expressed in tax rate increase and percentage increase:

1990-91, 1.9 mills, 7 percent.

1991-92, 0.2 mills, less than one percent.

1992-93, 1.3 mills, 4.6 percent.

1993-94, 1.2 mills, 4 percent.

1994-95, no increase.

1995-96, 1 mill, 3.2 percent.

1996-97, revaluation, tax rate dropped seven mills.

1997-98, 0.9 mills, 3.6 percent.

1998-99, 1 mill, 3.9 percent.

99-00, 1 mill, 3.7 percent

00-01, 2.9 mills, 10.3 percent