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Groton Road Referendum

Problems with Groton Road Referendum for Bonding

Notes from the Old Noank Jail                                    

Groton Road Referendum                                                                

by Ed Johnson  

Recently, following my own inquiry for opinions, I received a number of E-mails from a variety of Groton residents and town officials concerning the upcoming Referendum on November 6th pertaining to the proposed Bonding for road repairs. Briefly, all of the residents' replies I received are not favoring this proposal. A brief summary of some of their feelings is as follows:

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"In an economy that is as unsettled as this, I think bonding that much money is risky, at best.  That's a huge amount of money in interest, and I don't think the $60,000 per application justifies it."  

"My concern is that they (the town) might try to run sewers and water mains to other outlying districts (which will increase sprawl) while supposedly just putting a new cover on the road surface."  

"My reasons include the fact that it makes no sense to me to pay almost $2.4 million (20% ) in interest on $11 million. Bonding should be reserved for only very large projects (like building or renovating a school) that cannot be paid for as part of an annual budget. That is not the case for roads and streets, which have always been done as part of the annual budget."  

"While some argue that, in recent years, not enough was funded, that is the choice of our local elected representatives, acting on our behalf to keep taxes down as best they can.  I do not myself see that roads throughout Groton Town, City and Groton Long Point are in such terrible disrepair."  

"I see no reason to spend 20% on interest charges to borrow the money. That's a waste of $2.4 million in my opinion. Just because interest rates are low, that doesn't mean you borrow money you don't need to borrow."  

"The issue of the explanatory text, not clearly explaining to the voters, that doing this increases the cost by $2.4 million (in interest charges) is a legitimate concern...but...probably what is true is that explanatory texts have never done that. They only indicate an "increase in the mil rate"...which includes the cost of paying for the interest. But, you can't separate out principal and interest."

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From Town Officials, I received the following:  

"The explanatory text for any Referendum in not required to be produced. But our town has made it a standard policy to send out an explanation to residents when the Town Council and RTM ask for bond packages to be voted on.  The state has requirements that towns must follow if they choose to send out any explanatory text.  Our Town Charter also requires the Bond Council and Town Attorney review of the text. The text must also explain in unbiased terms the scope of the project. "  

"There is no requirement to include the cost per assessed property like the table that is in the current text.  That table depicts an estimate that a taxpayer would incur on every $100,000 of assessed property.  Remember that assessments are based on 75% of the market value. Having said this, be aware the town has never been required to include interest charges that may or may not be applied, because the bond does NOT include interest.  The town cannot borrow money to pay interest.  Instead, the interest is included in the budgets that are approved by the Town Council and RTM every year.  These funds are paid for out of the General Fund, i.e. the taxpayers."   ---------------------------------------------------------------------------  

And from Town Government representation, I received the following:  

"The Town is not bonding the entire $11.2 million all at once. We would "bond as we go" over the period of 2013 through 2017. If, during any given year and depending on the economy, the Council and RTM feel they can include highway maintenance funds into the actual budget, that would mean the Town could bond less of the total amount approved for bonding of the highway maintenance project."             .                      

"With almost daily fluctuations in the interest rates on municipal bonds, in conjunction with not knowing when or exactly how much we will be bonding at any given time, it would be impossible to include, in the advance test of the referendum question, the exact amount of interest we would/will be paying. Another thing to consider is that periodically the Town re-finances the outstanding bonds when the interest rates are lower. Thus we lower the overall [interest] costs of bonds previously taken out."

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In summary and conclusion of the above, my personal feeling is that a road project of this size does not warrant a referendum for a bond. My primary reason is that I have also recently been advocating for an annual referendum on the Groton Town Budget itself (a large sum of money) in the event that the Council and RTM allow property tax increases to go above 3% for any residential property. We need to have this protection and I am sensing a resistance by the Council to changes in the Town Charter that would allow this to happen.  

Therefore, I suggest that we defeat this request for a bond to do road repairs, on the grounds that it really isn't necessary. Let's instead be sending a message to both the Council and the RTM that we want an annual referendum on the Town Budget to protect ourselves before we entertain any more special bonding. We already voted down Phase II in a 3 to 1 landslide. Lets do it with this one as well. 

Comments:  EdwardR.Johnson72@gmail.com       

 

 

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