Council looks to save money for future debt service

City officials seem to more than a little interested in taking advantage of a new state law that, for the first time, allows municipalities to put money aside that can later be used to help pay the debt service on future borrowings. City Manager Eileen Cabanel on Monday briefed councilors on the effects of legislation that Gov. John Lynch recently signed into law and suggested the city continue to commit to spending $3.28-million on capital improvements each year, with the difference between that sum and the actual current need, if any, going into a capital reserve fund.

Councilor Henry Lipman (Ward 3), who is chairman of council's subcommittee on finance, agreed with that recommendation, adding that the city needs to find the "discipline to save for infrastructure" improvements.

Municipalities have lone been able to put money aside for capital purchases but have never before been allowed to use saved money to make principal and interest payments.

There was no detailed discussion about specifically what the saved money could be used for but Lipman mentioned Laconia High School in passing and that inevitable reconstruction or massive renovation project is clearly the 800-pound gorilla lurking in Laconia's future. In current dollars, the cost of "fixing" or rebuilding LHS has been estimated to be in the $50-million range.

The council has gone to great lengths to fit the debt service on the $23-million that has been borrowed over 30 years— through the sale of general obligation municipal bonds — to pay for the reconstruction of Memorial Middle School very close to or under the $3.28-million per year budget number that was the norm when the property tax cap was approved by voters in 2005. The total capital budget number, of course, includes existing debt service and new spending on all kinds of projects, including road repair. Debt service on the middle school project is backloaded but will run between $1-million and $1.3-million per year for most of the life of the bonds.

Cabanel reintroduced councilors to a spreadsheet showing that beginning in 2011, the city's current obligations will total $680,142 or more less than the $3.28-million budget figure and that is the money she believes should be placed in a capital reserve fund. Without other new projects coming on board, the annual surplus would grow to over $2-million per year by 2025.

Lipman agreed the projected surpluses should be saved, saying that course of action was preferable to "spending the money on a whirlwind vacation".

Cabanel noted the council would have to very specifically designate what the money was being saved for, and that direction could only be changed by a three-quarter majority vote of the council.

No action was taken on the proposal, but the Finance Committee is expected to take the matter up again when it next meets on Sept. 10.

NOTES: Councilor Armand Bolduc (Ward 6) complained of excessive speeding on Elm Street and suggested the speed reader board trailer police have placed in that area was doing nothing more than giving offenders a something to play with. "They go faster," he said. "The trailer doesn't give anyone a ticket; we need to have police go over there and pick people up." Bolduc went on to say that the improved condition of the road at its northern end was making matters worse. Cabanel said she would speak with Chief Tom Oetinger about the situation. . . . . . Cabanel reported that the main entrance to City Hall was now fully handicap-accessible because of the installation of an automatic door opener on the north door. The matter was brought to the attention of councilors in June by resident Joanne Carignan (see photo on page 1) and they vowed to take care of the problem as soon as possible. Cabanel said the improvement cost about $1,500. . . . . . Councilors want additional information before they approve a request from Fire Chief Ken Erickson to spend $7,200 on rescue equipment — $4,900 for a hydraulic cutter, etc. – that was originally budgeted for the purchase of inflatable bags used to left heavy objects at the scene of an accident. Cabanel said that Erickson had advised her that the $12,000 budget for the purchase of the bags was actually going to leave a large surplus because his department had agreed to share resources with Gilford. Led by Councilor Bob Hamel (Ward 5), the council indicated it wanted to know if the equipment Erickson wanted is something he has never had before, or replacement pieces, before making a decision. . . . . . Agreeing to a request made by City Clerk Ann Kaligian, councilors agreed to increase the pay rates for election workers. The hourly rate for ward moderators and clerks will go from $6.50 per hour to $7.50 per hour. No election or checklist officials will be paid less than $6.50 per hour, which, as of September 1, is the new minimum wage.