Borough to Borrow $5.5 Million in Tax Anticipation Notes

Commissioners authorized the issuance and sale of tax anticipation notes at their Monday meeting, which will involve their borrowing $5.5 million.

"We did this last year, and we think we'll have to do it again this year," said Mayor James Maley Monday evening. "What (this is), is a short-term bargain—of 90 days, in this case—created from cash flow problems.

"This year, we adopted our (municipal budget) in plenty of time, got our tax bills out on time, but the state of New Jersey had not adopted their budget, and hadn't certified the numbers the county (of Camden) needs in order to strike a rate and introduce tax bills," said Maley. "We were ready to go, but the state and county weren't.

"So there's no revenue coming in, and we're pretty sure we'll have tax flow issues in the next 30 to 60 days," he said. 

To offset this lack of incoming revenue, Maley said the borough will borough $5.5 million from First Colonial National Bank.

The loan will carry a 1.5 percent interest rate, said commissioners, for the next 90 days—assuming the borough needs to extend their 30 to 60 day prediction. 

"We can borrow the ($5.5 million), and as soon as money starts coming in, we can pay it off," said Maley. 

Borough records show the majority of the loan will be used to pay county taxes, school taxes and debt service. 

According to the borough's general current account, regarding expenditures in July and August of 2011, the following breakdown shows how the $5.5 million loan will be appropriated. 

• School Taxes—June and July—$2,318,628
• County Taxes—Due August 15—$1,752,000
• Payrolls—Three Sets—$625,000
• Payment of Bills—Health and Dental—$312,000
• Payment of Bills—General Accounts—$300,000
• Debt Service—Due August 1—$239,684
• Total—$5,547,312

"That $5.5 million includes us paying the school the money they're due, and paying the county the money they're due," said Maley. "It's for our total taxes. None of the bills are out yet.

"We'll know by the end of this week if we're going to actually need to (take out the loan)," said Maley. "But (authorizing it tonight) gives us the flexibility (to do so) if we need to, when the time comes."