Date: June 5, 2006

On May 30th, seven members of the Newton Board of Aldermen filed a request to place a binding debt exclusion question for the funding of the new Newton North High School construction project on the November, 2006 ballot. The item was filed by Aldermen Ken Parker, Steve Linsky, Amy Sangiolo, Verne Vance, George Mansfield, Victoria Danberg, and Jay Harney.

The debt exclusion question will now be deliberated by the Board of Aldermen and its committees. Passage of the item would require a two-thirds vote of the Board of Aldermen. If passed by the Board, the proposal would place a binding question on the November, 2006 election ballot asking Newton voters whether they are willing to exclude debt service, including principal and interest payments, related to the project from the property tax levy limits of Proposition 2 1/2 to finance the construction of the new high school.

The debt exclusion proposal is being offered as an alternative financing mechanism for the project, as compared to heavy reliance on diversion of City revenues from other capital and operating uses. The project is expected to require borrowing of more than $100 million (in addition to the anticipated $47 million in state aid and expenditure of $9 million of capital reserve funds) in the form of 20-year bonds, resulting in more than $50 million in interest payments. Under the Mayor’s plan, this entire $150 million (an average of $7.5 million per year) would come out of the funds available for other capital projects and to pay operating budget expenses.

By doing a debt exclusion, not only would this $150 million be available to meet existing capital needs and to pay operating costs, but the $9.4 million in the City’s capital reserve fund that was going to be used for the high school project could be freed up for other long-overdue capital needs, such as repairing the City’s fire stations and renovating elementary schools.

Co-sponsors of the docket item expressed a number of reasons for offering the proposal:

“We filed this item because without a dedicated new source of revenue, the new high school project would cut into our ability to pay for other infrastructure and operating needs of the City, including repairs to our existing school buildings, paying teachers, firefighters and police officers, and maintaining our parks and infrastructure,” said Alderman Ken Parker.

“There is a great benefit to involving the public in the process,” said Alderman Steve Linsky, who serves as the Ward Alderman from the area in which Newton North High School is located. He added that he and other aldermen have also filed a similar debt exclusion item to enable voters a voice in addressing the city’s deteriorating fire stations and other pressing infrastructure needs.

Alderman Amy Sangiolo pointed out the dangers of pursing the project without a debt exclusion. “Do we really want to build a beautiful new high school without knowing how we’re going to be able to afford the teachers needed to teach in it?” she asked.

“This is simply a matter of being fiscally responsible and accountable to the public,” pointed out Alderman Verne Vance. “The Mayor’s financing plan relies on additional state aid and new growth that we have no way of knowing will ever come to fruition. It’s not so much a plan as it is a wish.”

Alderman George Mansfield added: “When the City is about to embark on a construction project, the magnitude and cost of which far exceed anything we have undertaken in the past, I believe the responsible course is to ask the voters for the authority to spend their money on this project, rather than committing uncertain future revenues now and then asking the taxpayers for an override later, when we find we don't have enough money left to provide basic City services.”

Alderman Victoria Danberg commented, “On a project of this magnitude, it makes good sense to create a discreet and clear funding vehicle that will last for the life of the loan, then dissolve. Separating the financing of the school from the City's operating budget is sound and responsible practice.”

“We can’t even make ends meet without the new high school,” said Alderman Jay Harney. “How in the world will we be able to balance our budget while paying for it as well?” he asked.