Belfast, Searsmont look to borrow money due to lack of school budget
Belfast and Searsmont are considering borrowing money to maintain their cash flows, as officials wait for a school budget to be approved before sending out tax bills.
City Manager Joseph Slocum asked councilors to approve a first reading of a proposal to potentially borrow up to $3 million through the issuance of a tax anticipation note. Slocum said the city's undesignated fund balance, or surplus, is down to about $1.9 million and the city is making monthly payments to Regional School Unit 20 in the amount of $785,000.
Slocum said the city could potentially borrow the money at an interest rate of less than 1 percent.
“We just don't want to run out of money,” Slocum said.
City Treasurer Rickie LeSan said the tax anticipation note would allow Belfast to borrow up to $3 million, but the money would be used only as needed, as opposed to borrowing the entire amount up front.
Councilor Roger Lee asked if the city could send out tax bills based on the 2012-2013 district budget. Slocum responded by saying the city is trying to wait until a budget is approved before sending out the tax bills. He continued by saying he hopes the city will “have more clarity” after the Sept. 17 budget referendum vote.
Mayor Walter Ash, Jr. commented that he tries to prevent surplus funds from being depleted too much so that money is available in a scenario such as the one the city is now facing.
Slocum said he would also contact the schools to determine if the district can borrow enough money to maintain its own operations. Currently, RSU 20 is operating off of a $33.45 million budget approved during the July 22 validation meeting.
The first reading of a proposal to issue a tax anticipation note up to an amount of $3 million was approved unanimously.
Like Belfast, Searsmont is also looking to issue a tax anticipation note in the amount of $1 million. A public hearing to authorize the issuance of the tax anticipation note is scheduled for Tuesday, Sept. 3, at 6 p.m. at the town office, located at 37 Main St. South.
Selectman Bruce Brierley said the town will have the option to borrow up to the $1 million, but would only use the funds as needed, as opposed to borrowing the entire amount up front. He added that as soon as a school budget is approved and taxes are paid by residents, the town would pay off the note.
"We can't send out tax bills because we don't know what the [school] budget will be," Brierley said.
He said he believed the town could borrow the money at an interest rate of less than 1 percent.
Following the public hearing, a special town meeting will be held at 6:30 p.m. at the Searsmont Community Building to determine if the town will amend the tax due date and interest effective date for 2013 property taxes.
Republican Journal reporter Ben Holbrook can be reached at 338-3333 or at firstname.lastname@example.org.
Ben Holbrook is a reporter for The Republican Journal covering general news.
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