Kicking the Can Down the Road–The Story of Harrison Township’s Debt …
Harrison Township is a fantastic place to live, raise and educate our children, engage in community activities, sports, and hopefully grow old. It would also be a fantastic place to see our grandchildren live and grow, but is that really possible given the black cloud of DEBT hanging over our Township?
Harrison Township currently has $39,473,283 in municipal debt. Of that, $16,792,283 is short-term debt and $22,681,000 is long-term debt. And this does not include the over $16 million in Sewer Debt the Township currently has. Harrison Township’s 2017 municipal-purpose budget is $6,510,886. The total debt owed by the Township is almost 10 times its annual revenue!
Mayor Manzo will tell you the Township must incur debt to cover infrastructure projects and all towns do the same thing. While some debt is reasonable, the amount of debt Harrison Township has is not.
There are two kinds of municipal debt: Bond Anticipated Notes, or BANs (short-term debt) and Bonds (long-term debt). Harrison currently owes $16,792,283 in BANs, 10-year notes with no payments due during the first 3 years. Even though no payment is due, Interest accrues during this time. In the fourth year, payments must be made or the debt can be refinanced into a Bond, usually with a 20-year term.
Under our current leadership, Harrison Township is paying nothing on the BANs in years 1 through 3. Beginning in year 4, the Township is paying only the minimum amount, which it will continue to do for the next 6 years. All the while Interest is accruing and compounding. Our current leadership’s plan is to pay the BANs minimally for years 4 through 10, then refinance the BANs into a 20-year Bond. This will convert our 10-year debt into a 30-year debt. By paying nothing on the BANs for 3 years and minimal amounts for the next 7 years, the Mayor is freeing up money from the budget to spend now, without regard to the mounting debt and interest which will burden taxpayers for decades. The current leadership in Harrison Township just keeps spending money, money we do not have!
According to the Township’s 2017 budget, no money is budgeted to pay down the 2015 & 2016 BANs (see 2017 budget, sheet 27, line 45-940). For the BANs older than 3 years, the Township budgeted to pay only the barest minimum: only $558,500 will be paid on $16,792,283 of DEBT, which allows the spending to continue (budget, lines 45-920 to 45-935). All of this information is available on the township website or click the link below.
Vigilante & Rotte believe this is an issue of fiscal irresponsibility. Currently short-term BAN debt can be converted to Bond debt at rates as low as 2.5%. The Township’s BAN debt is now accruing interest at 1.5%. The current administration has elected to pay 1.5% interest over 10 years and risk increases in interest rates come 2027. That is the same as having a variable-rate mortgage and letting it ride when you can see that interest rates are rising.
Our current Township administration is Kicking the “can of Township Debt” down the road…… hoping that by opening our town up to national developers there will be future ratables to cover the debt. . For ten years, the current administration has increased debt even though those ratables are still in litigation, haven’t broken ground and are unlikely to bring in significant sources of revenue for at least eight to ten years. Counting your chickens before they are hatched. Fiscal Irresponsibility.
In the below emails you can read how your Mayor is trying to play the Smoke and Mirrors game with taxpayers, using “Lou’s Accounting Team.”