The city’s debt

Published 12:00 am Tuesday, April 29, 2008

Often it’s heard that the City of Franklin has way too much debt.

The likelihood is that if the city had any debt at all that would probably be too much. The city would like to have none, but that will likely never happen. As things move forward, get older and the city grows, there are needs and demands that will always require that some money be borrowed from time to time.

What was the money in the past actually borrowed for? That may not make a difference to some, but for most it probably does because it shows that the city hasn't borrowed money for things that weren't needed, required or demanded. So let's take a look.

A complete analysis of every reason was done well in advance of each borrowing. Nothing was done lightly, and every borrowing gave the opportunity for anyone who wanted to state his or her opinion in advance of the project being approved.

The city’s debt/borrowing limit by state law is 10 percent of the Real Property value of the city. The city's value with the new reassessment will be approximately $620 million or more for the upcoming year. That means that the city's debt limit (the amount of money it can legally borrow) is $62 million.

For many years, the City Council has set a target of having no more than 5 percent debt – which would equal $31 million. The city’s debt on June 30, 2009, will be $20.7 million, or 3.3 percent of the assessed value.

It should be noted that the water, sewer and electric department are not used by the state in the figure for debt capacity because they are &uot;enterprise&uot; debts that are paid back through fees and charges for water, sewer and electricity. The other real, personal or sales tax rates, etc., don't fund the capital building needs of these funds. Therefore, the actual debt that the city has to which the state limit is compared is actually

$13.4 million – just over 2 percent of the assessed value of property.

The full debt of the city on June 30, 2009, will consist of:


1) Approximately $6.7 million in school debt. Projects that are included are payments on a 1991 loan for S.P. Morton, a 1992 loan for J. P. King Jr. School, a 1995 loan for Franklin High School, 1999 roof repair, 2003 grade realignment of S. P. Morton, J.P. King and the high school, 2006 J.P. King gym, 2003 and 2005 QZAB loans at 0% interest for various renovations and repairs established as priorities by the school board.

* 2) Of the $7.3 million General Fund debt, $5.4 million, or 75 percent, is debt incurred as a result of Hurricane Floyd recovery. Were it not for the flood the General Fund would have only $1.9 million in debt. Projects for this include a debt incurred in 1992 for the regional jail, Pretlow Park etc., city buildings after the flood (police/courts, Hunterdale fire station, downtown EMS building, Social Services building, incubator, City Hall), health department and King Center roof and HVAC work, bleachers at Armory Field and Poplar Springs Cemetery expansion.

* 3) Some $6.7 million debt was for water/sewer and electric projects, which are all paid for out of revenues and fees in these &uot;enterprise&uot; funds. These projects were bonds for sewer line inflow and infiltration required by the state; Hunterdale sewer bonds following the Phase II Annexation; 2001 Electric Generation project; sewer inflow and infiltration consent order required by the state; and the newly drilled Hunterdale well. New for the proposed 2009 budget is just over $2.4 million for various electric projects and capital needs in that department.

While every one of us prefers less debt versus more, every decision is influenced by the city's ability to pay, and the cost to taxpayers. As seen above only necessary projects were undertaken to meet the needs of our city in order to meet established goals set forth in the city’s vision statement and annual goals and objectives and action plans.

We have a very precise debt-reduction plan totally available to the public in the annual budget that is adopted each year. All of our payments are on schedule and on time. The city has also been putting aside $250,000 a year toward a future school construction fund in anticipation of a new school building. The city is using a portion of that to pay for the land that the City Council bought for a new school site at Fairview and Crescent drives near the YMCA and existing high school.

There are also serious financial impacts on the city by state cuts in funding to the city. Most of the time these cuts are in areas which are exceedingly difficult to cut out of the city's budget. It is anticipated that some $69,000, at a minimum, will be cut for the coming year.

When one penny on the city’s real estate tax rate brings in approximately $60,376, you can see the impact.

While the future is uncertain, the city has approached this year’s budget with caution and a very lean eye. The proposed city budget can be viewed on our city Web site at, or at the Ruth Camp Campbell Library, the Martin L. King Jr. Center or City Administration Offices in City Hall.

Take a careful look at it.

This has been a presentation on the city's debt hopefully done in a way that will clarify many things that you’ve either heard or read.

The public hearing on the budget is set for 7 p.m. on May 14, but any citizen can always call or e-mail his/her council member, the city administration or the director of finance to ask questions and to receive answers.

Everything is open to the public for review.

Bucky Taylor is the Franklin city manager. His e-mail is Andy Rose is the city's director of finance. His e-mail is