In our last article, we broached the subject of debt and the township’s reliance – or over-reliance – on debt to fund our yearly expenditures for items such as roads. So, ok, we want to reduce our reliance on debt moving forward, especially as the cost of borrowing is rising. What’s the solution?
Well, there’s no magic wand we can wave to suddenly end our reliance on bonding. We are not going to add $6 million to the township’s operating budget in one year because that would result in a large tax increase to residents. Rather, the answer to this problem is found in fiscal discipline and restraint over a period of years, with each year bringing us closer to our goal of a debt-free Bridgewater. So here are a few areas that we need to focus on.
Spend less. This is an obvious answer, but is not always simple. We still need to do road and infrastructure improvements, which is the number one cost driving debt. However, there are other items on which we spend borrowed dollars that we should scrutinize carefully. Recently, the council rejected a proposal to borrow $70,000 to put up new signs at our township parks. There’s nothing wrong with our old signs; this was simply an effort to “improve” the existing signs. I believe, as did Councilman Filipe Pedroso, that the project, however well-intentioned, did not merit borrowing $70,000. So we rejected the bond ordinance. $70,000 may be a drop in the bucket of overall spending, but it is $70,000 less debt we are taking on this year, and less interest we will have to pay back going forward. We need to continue to look for such items that may be nice to have, but are not necessary expenditures of taxpayer dollars.
Borrow less. We should also consider paying for more items with cash rather than incurring debt, along with larger down payments and reducing the total amount we borrow on individual projects. This year during the budget review process, the council found savings within the budget and redirected that money toward paying cash for existing authorized debt as well as for increasing the amount of money that will be available for down payments on this year’s borrowing. This nearly $100,000 will once again help the township reduce the cost of interest that would otherwise be incurred on that debt. Add that to the $70,000 for park signs, and money begins to add up.
Proper planning. If the township is truly serious about reducing reliance on debt, we need to create a long term plan that sets target goals for debt reduction based upon our existing debt schedule, and to properly plan to put additional resources into our operating budget to either pay off existing debt sooner or to take on less new debt, or both. While the council can look through the budget each year to find savings, if we are truly going to change course, there needs to be a long term vision for debt, which simply does not exist now. That should include the help of professionals along with our council Budget Committee.
Find additional revenue. Along with proper planning, the township should consider directing newfound sources of revenue – such as from new hotel taxes or development fees – toward debt payments rather than simply adding on new programs (and related new costs). Governments always want to grow - and grow - and grow - and with that comes rising expenses. Someone needs to say no to new expenditures and direct additional revenues towards debt reduction that will have the long term effect of lowering costs, reducing taxes, and allowing more funds to be available for desired services. In an example of lost opportunity, the administration recently failed to increase our requested grants from the State Department of Transportation after the influx of money into the Transportation Trust Fund from the increased gas tax made more money available to municipalities. While other towns received hundreds of thousands of dollars more in state grants, we didn’t even ask, potentially losing out on significant money for road repairs.
Reduce costs. The township needs to continue to explore ways of reducing the underlying costs of the items for which we are borrowing money, such as putting road projects out to bid as a group, increasing competition and finding savings from one company doing multiple roads in an area. We need to continue to look for partnerships with Somerset County and through purchasing co-ops, as well as restructuring our existing debt through refinance authorizations, such as the one the council approved recently.
Yes, these steps are small, especially when each one is taken on its own. But any worthwhile effort is made up of countless small steps which, when taken together, lead to great success. I believe we need to have a long term vision of our financial health and well-being for our township. As a father of three young kids, I lose sleep thinking about how they are going to be the ones paying for this debt. I hate thinking about how they may be priced out of living in Bridgewater, and reducing the township’s long-term debt is one way we can keep our township affordable for years to come. We gain nothing by putting off for tomorrow our problems of today. We need to take steps now, to plan for our future, and I hope that I can keep driving this discussion at the township to make sure our future is bright in Bridgewater.