Gilford confirms borrowing

The Board of Selectmen yesterday confirmed the decision it made last week to authorize borrowing as much as $6 million to meet a cash flow shortfall.

Finance Director Debra Shackett told the board that a line of credit has been arranged with Laconia Savings Bank (LSB), which can be drawn on as necessary at an interest rate of 1.8 percent. The selectmen expressed their thanks to Greg Dickinson, the Town Treasurer and president of Village Bank and Trust Company, and the officials of LSB for negotiating what Shackett called "the best possible deal." The borrowings will be repaid from the proceeds from the property tax bills that are due in December.

The town's cash flow was squeezed by what Town Administrator Phil Arel called "a perfect storm." First, because the budget grew more between 2003 and 2004 than in the past three years, the pace of tax receipts in July, which were collected at the 2003 rate, failed to match the pace of municipal expenditures. Second, in 2003 $1.8 million of the accumulated unspent surplus (or "unencumbered general fund balance") was used to lower the tax rate by reducing the amount to be raised by property taxes. Third, the 2004 tax rate will be set and the tax bills issued later than usual. Finally, departments tend to make purchases early in the budget cycle, when cash flow is tightest.

Shackett told the board that news of the cash crunch prompted some taxpayers to offer to pay their bills early and sent town officials "to tracking down our receivables."

Last week, Wil Corcoran of Corcoran Associates, the firm that prepares the annual assessment for the town, assured the selectmen that the assessment would be complete by Monday or Tuesday of this week. However, yesterday Shackett told the board that she expected the assessment would be completed today.