Budget or Borrow?

Putnam plans to use debt to fund road paving, vehicles

Putnam County’s plan to use $1.5 million in bonds — a form of debt — for road paving and vehicle purchases raised questions last week at a legislative committee meeting.

The issue arose on Feb. 20 when the Physical Services Committee recommended sending two bonding proposals to the full Legislature for approval.

The first authorizes borrowing $500,000 for 15 years to pay for about half of what is needed to buy heavy equipment and vehicles for the Highway Department. (The state is expected to provide the remaining $495,000.)

The second measure calls for borrowing $1 million over 10 years to cover road and parking lot repaving and repairs.

Under both proposals, the county would use property-tax proceeds to repay the principal and cover interest.

“Why are we borrowing to pave roads that we know need to be resurfaced every so often?” asked Legislator Nancy Montgomery, who represents Philipstown.

Rephrasing the question, Legislator Ginny Nacerino (R-Patterson) added: “Why are we bonding for this when we can anticipate it? Why aren’t we prepared to fund it without bonding?”

Montgomery similarly asked about bonding for replacement vehicles.

“Why are we borrowing to pave roads that we know need to be resurfaced every so often?” ~Nancy Montgomery

Legislator Joseph Castellano (R-Brewster) countered that often “it’s fiscally responsible” to borrow, especially when interest rates are low.

Legislator Carl Albano (R-Carmel), who chairs the committee, cited “a delicate balance” between borrowing and budgeting and said it would “be interesting to see” which bond debts are ending this year and whether Putnam is headed “in the right direction, or, in the very least, breaking even.”

Representatives from the Highway Department said Finance Commissioner William Carlin decides the best funding method on major projects. They also said that some items cost too little to warrant borrowing for them.

Indeed, that evening, the committee forwarded to the full Legislature authorization to spend $19,500 on mowers for the bike path and county parks; $17,000 on a “manlift” for the facilities division; and $7,500 for a plow at Tilly Foster, the county’s farm-park.

Legislators suggested that Carlin, who was not present, could address bonding issues when the Audit and Administration Committee met on Monday (Feb. 24). But although Carlin attended that session, the discussion did not include bonding.

Montgomery said on Wednesday (Feb. 26) that she intends to bring up the issue with Carlin in a future committee meeting, where she said the topics might include:

  • The total amount Putnam has bonded for long-term and short-term debt;
  • The relationship between retiring debts and taking on new ones;
  • Each department’s share of debt, perhaps shown as a pie chart;
  • The proportion of funds drawn for operating expenses and capital expenses from bonds versus available cash.

Sales tax

According to data provided on Monday, Putnam County last month collected more than $5.5 million in sales tax, a record amount for January and some $500,000 more than in January 2019 and $2 million more than January 2008, the first year listed in a report released by the county.

“It’s good news that the economy is moving in the right direction, obviously,” said Castellano, who chairs the Audit Committee.

Montgomery expressed hope that Putnam towns might receive a share. Unlike most other counties in the state, Putnam does not return a portion of sales tax to each village or town in which it is collected.

Carlin replied — as the county often has — that Putnam shares sales tax in other ways, such as picking up local charges for supporting community colleges, running elections and covering unpaid local tax bills. Mandates from the state and federal government “aren’t stopping,” he said. “Do you want to pay sales tax, or do you want to pay property tax?”

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