Myth: Capital Spending is Not a Factor.
By Jim Conley • Mar 25th, 2008 • Email This Post to a Friend •
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Of all the myths leading us into a May override bailout ballot, this one puzzles me the most. It seems that lots of people in town government believe that the money spent on buildings (like a town hall renovation), roads and the golf course operate under a fixed formula that has no bearing on the Town’s current operating deficit.
The formula holds that total debt service and capital items financed by taxes will not exceed 5.5 percent of the previous year’s net operating revenue ($179 million for this year). Sounds like a good policy, no? Well, no.
Because just as Brookline town government has put a cap on the allocation, they’ve also put in place a minimum mandatory spending amount. I’ve spent years asking people in town government what would happen should we allocate say only 3.5 percent in a given year (and saving nearly $4 million). And I always get the same answer — the bond rating agencies might downgrade Brookline from Aaa to, I don’t know what.
Hello? You mean the people who exist to help sell debt in the bond market are going to punish Brookline should it take on less debt in a given year? Really?
No wonder they need an override.
Jim Conley is publisher of On Brookline.
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