Staff Writer
HOULTON — “The cost of borrowing keeps the town going.”
That was the reasoning offered during the Feb. 25 council meeting as councilors discussed accepting a motion for a Tax Anticipation Note (TAN) bid for $1.5 million from Key Bank.
Houlton Town Manager Doug Hazlett explained the bid process, which attracted offers from four other local banking institutions, as well as the importance of keeping the town’s funding consistent.
“We collect about 90 percent of our revenue in the August/September/October time period, so fund balance alone can’t carry us through the months preceding when people pay their tax bills once a year,” explained Hazlett. “That’s why we borrow the money.”
Hazlett said this year; the town’s TAN works out better because the interest rate is lower than what they had last year. The Key Bank bid offered a 2.39 percent interest; lower than the 3.98 percent interest from 2007.
A discussion ensued on the issue of changing when tax bills are collected, which would ease the town’s pressure of having to borrow money. The town manager said it is something that could be considered in the future, but not right at this moment.
“If we were a July-to-July fiscal year than you could do two payments in the same budget year,” he explained. “If we do it now, we’re pushing one into a budget year that doesn’t exist.”
Councilor Paul Cleary wanted to reassure the public that borrowing funds doesn’t mean something is wrong, it’s something that is done every year while the town waits for taxes to be collected.
“We’re not in any financial difficulty,” he said. “I just want to get that cleared up. We set the mill rate in July and we send the tax bills out in August so we have that period of about three or four months where it’s sometimes an issue and this is what will carry us through.
“The cost of borrowing keeps the town going,” explained Cleary.
Town councilors voted unanimously 6-0 to accept the bid from Key Bank at a rate of 2.39 percent.
