Pittsfield Continues Process of Cleaning Up Old Debt
PITTSFIELD, Mass. — The city's Finance Department is continuing its efforts to clean up old debt authorizations.
On Wednesday, the City Council's Finance Committee approved rescinding $227,403 worth of authorized but unissued debt from the three prior fiscal years.
Over the years the City Council had authorized the administrations to borrow for projects or purchases. But, when those projects never come to fruition, the authorization stays on the books.
A little over a year ago, Director of Finance Matthew Kerwood started a process to clean up some $190 million worth of authorizations (though that figure did include $120 million for the Taconic project, which has not fully been bonded).
In November 2016, the council rescinded $675,000 worth of old authorizations, kicking off a process to clean up the books in regards to bonding.
Meanwhile, the state's modernization act has changed the way bond premiums can be spent. When the city borrowed for a project and it came in under budget, the excess money is still included in the city's debt services budget line each year as the bond is being paid off.
The state law now allows the city to either use those premiums for a similar project or to borrow less on another project. The Finance Committee approved using $366,152 of those funds to offset the borrowing for the Taconic High School project.
"What we are using is using the premium from the issuance to reduce the appropriation," Kerwood said. "It structures the notes. Instead of borrowing $20 million, we are borrowing $20 million minus the bond premium."
The Finance Committee approved doing a similar thing with $4,000 of unused bond premiums for a truck the city recently purchased. The council had authorized $50,000 for a purchase of a one-ton sewer truck.
"We'll be paying the debt service on $46,000 instead," Kerwood said.
The Finance Committee handled the requests with little conversation Wednesday night. The items will go before the full council for final approval.
Tags: bonding, debt service, municipal borrowing,
