The Hopewell Borough Council met virtually for its August regular meeting to discuss the budget and debt services.
By approving the following resolutions, there will be an increase in the monthly costs borne by the Borough. Tax bills will be increased in order to pay down the debt, explained councilmember Sky Morehouse. The Borough is taking on no new debt, but instead changing how it is being paid back.
“What we’re going to see by passing these ordinances is approximately $130 per household, per year, increase in the debt service over the course of the next three to four years. Then, it will begin to taper down a little bit because, again, we’re paying down our principal,” said Morehouse.
The Council approved a resolution for the Hopewell Borough debt policy. The current debt percentage is 1.7 according to Borough Clerk Michele Hovan. Hovan explained that this policy formalizes what is statutorily permitted, but it also discusses the importance of watching how debt is managed annually. This policy is meant to stabilize how the Borough is applying the debt service toward its obligations, according to Hovan.
“You don’t want to trigger spikes in your budget, where you’re not paying much this year, but you’re paying more in your debt service next year,” said Hovan.
Morehouse said he believes the Borough is spending an appropriate amount on the debt service and he would caution future Council members about allowing the debt percentage to reach 3.5, even though the Borough has the ability to go that high under State law.
“We, as a Council right now, are relatively tight-fisted and the Borough benefits from that,” said Morehouse.
Resolutions 2020-76 through 2020-78 were grouped together and discussed as one by the Council. These resolutions will move the current debt component from a bond anticipation note, which is primarily an interest-only mechanism, to a true municipal bond, which is a principle and interest payment mechanism, according to Morehouse.
Each resolution outlines a specific fund. Most of the ordinances are road projects and some also have a grant component. For example, for a $400,000 road project, the Borough is receiving $300,000 from New Jersey Department of Transportation, according to Hovan. The Borough is taking that amount and putting it into the debt service, which is how the Borough has been making debt payments, and they intend to continue that method.
“We’ve got a nice reserve to help keep those payments equal for the years to come, and we’ll continue to replenish that debt reserve,” said Hovan.
“The reason this is all happening now is because the market is so ripe to capture the low rate while we can. Analysts say after November it can get tricky, we don’t know what’s going to happen,” said Hovan. “We’re paying a lower interest on it if we jump now.”
The Council also introduced a bond ordinance for the replacement of a 2002 truck and a 1998 pickup truck. The Borough will be appropriating $78,000 for the new dump truck and this resolution will be passed at the next meeting.
Regarding department reports, the tax collection amount for July is $771,945.96. According to Hovan, this number is stable, and there hasn’t been any change in the pace of payments from one quarter to the next.
The next meeting will take place September 3 at 7pm.
ETA 8/21 to correct the spelling of Sky Morehouse’s name – with thanks to sharp-eyed Peggy Hoffmann-Connolly for letting us know.