January 22, 2006
Why does the Town of Bridgewater continue to borrow money? Last year (fiscal 2005) , the Town twice borrowed funds in anticipation of property tax revenues. Both times, $3M was borrowed, at a total cost to the Town of about $24,041. Already this year (fiscal 2006), the Town has borrowed three times:
$3,400,000 on 08/30/05 payable 11/29/05 at 3.25% for an approx. cost of $27,549
$3,000,000 on 11/01/05 payable 01/20/06 at 3.35% for an approx. cost of $22,027
$3,400,000 on 11/29/05 payable 01/20/06 at 3.24% for an approx. cost of $15,694
This means for the current fiscal year, the Town is spending $65,270 just to pay bills in a reasonably timely manner. Of particular note is the fact that the final borrowing on 11/29/05 was to 'continue' the original 8/30/05 borrowing - in essence borrowing money to pay back the original borrowed money.
To put this borrowing into perspective, the State has a report detailing the municipal borrowing by the cities, towns and school districts of the State. A total of 296 borrowings were done, most related to construction (schools, public works, etc...) projects - in fact, only 62 events were cities/towns borrowing in anticipation of revenues. The town of Hancock (population of 721 from last census; located in the Berkshires) led the pack with six RAN's (Revenue Anticipation Notes) with a total of $1,554,000 in total. The town of Edgartown (about 3779 population) had three RAN's totalling $4,000,000. And of course, Bridgewater, with a population of 25,185 (2000 census), and three RAN's with a total dollar value of $9,800,000.
Beyond the interest costs paid to the note-holders, there is time and effort by Town staff to effect these RAN's, and don't forget any financial and legal costs incurred to offer and process these Notes. What is going on with the Town? A few years ago, the Town balanced its Annual Budget by short-funding a pension line item forcing a subsequent Town Meeting to properly fund the account. Then this past fiscal year, the same thing again as $600k was diverted forcing a subsequent Town Meeting to fund the insurance short-funding with most of the available 'free cash'.
Bridgewater is acting like it just got a credit card, and is making financial decisions without any thought given to the costs to be incurred. Perhaps the solution is quarterly property taxes, or maybe the long-awaited sale of property off Robert Road, or simply living more within our means. There are costs to living beyond your means - and the $65 thousand in interest charges plus whatever other costs incurred is lost money. So, no matter if you would have preferred another policeman, fireman, teacher, or money to a program at the Senior Center or Recreation, that money was squandered without any benefit to the Town.
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Joseph Gillis Jr.
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