Watchung Finds Ways to Save to Reduce Debt Ratio

The Watchung Borough Council passed a resolution April 12 authorizing the cancellation of unexpended capital balances, a move that is expected to save the borough upwards of $1.4 million, and including more than $900,000 of unfunded debt cancelled, according to numbers given by Borough Administrator Thomas Atkins.

Councilman Thomas Franklin, on behalf of the borough’s finance committee, explained that this cancellation of unfunded debt will positively affect the borough’s debt ratio.

“For unfunded debt, we don’t actually pay interest or principal. It’s authorized debt, but it was never actually incurred,” Franklin said. “Because it’s a paper debt, it goes toward the debt ratio. By cancelling unfunded ordinances, it helps our credit rating and lowers the debt ratio.”

This is seen by the borough as a positive financial step as it works toward wrapping up its 2012 budget season. Franklin noted that, while the borough is waiting to put the rest of its capital budget together, its appropriations budget is “pretty much set.”

“It’s a good one, I think. It raises the tax rate 1.64 percent, which isn’t very much,” Franklin said. “The overall levy comes in at a little over 2 percent and includes cap and out of cap (expenses). In my book, that’s really good. This is a good budget; it’s a low expense, low increase. I’m happy with it, and I think the rest of the (finance) committee is, too.”

Franklin also had praise for his fellow finance committee members for their assistance during the budget development process; namely, he acknowledged fellow council members Karen Cassidy and Stephen Pote for their efforts.

“Our people do take an active part in formulating the budget,” Franklin said. “They ask a lot of questions and the knowledge base is there.”

Franklin also noted during the meeting that, due to conflicts in town on the same day, the public budget hearing originally scheduled for Saturday, April 21, was to be rescheduled for a weeknight yet-to-be-determined.

After the date is announced, members of the public will be encouraged to participate in the process as the borough moves closer to finalizing its 2012 municipal budget.