If you are struggling to keep a steady cash flow because you are attempting to make purchases from operating funds that normally would be borrowed for, borrowing can provide that breathing room to recover. In Platteville, by refinancing when interest rates were low, we managed to save over $74,000 in interest.
Your financial advisor should keep you appraised as to when rates are favorable and you should track your debt service so you borrow only at points when debt payments have decreased to a level which will allow you to comfortably borrow again. This can be predetermined by your bond maturity dates and your projected capital financing needs. For instance, if you set your debt buy down/pay back level at 2% of EAV and that will occur in 2010, you know that is a point where you can plan to borrow for that municipal building renovation that you know needs to happen between 2008 and 2014.
Wisconsin State Constitution Article XI, §3 ¶(2) (2) No county, city, town, village, school district, sewerage district or other municipal corporation may become indebted in an amount that exceeds an allowable percentage of the taxable property located therein equalized for state purposes as provided by the legislature. In all cases the allowable percentage shall be 5 percent except as specified in pars. (a) and (b):
net debt comprises all financial liabilities minus all financial assets of general government
The difference between a AAA rating and a A rating could mean as much as 2% in your interest rate. One a multi-million dollar bond issue, that means a lot of money.
Under the “pay as you go” plan, everyone payf for his own capital improvements. No in is forced to provide free goods for a future generation or to finance facilities for a jurisdiction in which he or she may not continue to live; nor will new members of the community reap where they have not sown.
Traffic generated fees; leases Secured by federal and state reimbursements, third party payments, and patient charges Secured by payments from businesses that use the facilities Secured by the revenues from electric power plants Secured by tipping fees and sale of recycleable materials Secured by event revenues, hotel/motel taxes Secured by connection fees and user charges
Special assessments: sidewalks, storm sewers, street reconstruction TIF: Industrial parks, renovations of business properties, power or transportation improvements to support industrial development, infrastructure
Essentially, you’re issuing short-term debt to hold you over until your expected revenue comes in. Kind of like a government pay-day loan.
Financial Management Series Number 5 DEBT MANAGEMENT Alan Probst Local Government Specialist Local Government Center University of Wisconsin - Extension
Pays for capital projects and acquisitions from sources other than debt such as current taxes and revenue; funds from Capital Reserves; special assessments or impact fees; and grant revenue from federal, state, or foundation sources