Editorial: Don’t shy from debt
06/06/2014 2:42 PM
02/15/2015 11:25 AM
Towns can, indeed, borrow too much money and find themselves upside down with debts rising like the floodwaters of the Neuse. But avoiding debt at all costs can sometimes cause more problems. That seems to be the path down which the town of Wendell is headed.
At a budget work session Tuesday night, town commissioners agreed to forego debt and, instead, pull from savings an amount of money that’s about one-third less than what town staff said the it needs.
Commissioners made that decision despite having plenty of money on hand to make those debt payments. The commissioners made that decision even though the League of Municipalities determined that the town’s finances were strong enough to take on a significant new debt. And they made that decision in spite of the fact that a number of charitable donations the town wanted to support will get a whole lot of nothing under the newly-amended budget.
What’s important to note here, though, is that the costs commissioners will avoid by reducing their draft from savings won’t go away. In fact they will multiply.
If the town needs three police cars this year to replace the oldest ones in its fleet, but only purchases one, then the cost of paying for those cars will be pushed into the next year. Add to that the cars that will need replacing next year and the town will have even more trouble seeing its way clear to meet the equipment needs of the town.
We don’t suggest the town be loose with its money. Commissioners are charged with being good stewards of the town’s limited resources. But we worry that pushing costs down the road only serves to set a future board up for failure.
We heard Wendell Falls mentioned as a potential saviour on the budgeting front. That argument has been put before the people in the past, with less than desirable results. The development was foreclosed on long enough ago that, had development occurred as expected, the neighborhood would be about half built out by now. Unforeseen circumstances stymied that growth. Wendell’s saviour turned out to be a mirage. It’s hard to sit here now, just six or seven years removed from that and argue that the town should bet its future on a single subdivision.
Yet that’s what the board – led by Mayor Tim Hinnant – is pushing.
Borrowing money to meet justifiable needs is not a bad thing. Other towns do it. Families do it. They consider their ability to repay the debt before they do so, but ultimately they incur a debt to make their family or their town stronger.
Wendell’s pay-as-you-go approach is the fast track to maintaining the status quo. We don’t think that’s what anyone – including the town leaders – really wants to see happen.
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