Final Payoff Makes Bernards Debt-Free
On a cold, snowy night, Bernards officials toss effigy of a 1991 bond into a "bond fire" to celebrate the end of municipal debt in the township budget.
It was a good night for a "bond-fire."
The township's planned burning of a reproduction of the last municipal bond now paid off as of the end of October was called off on Saturday because of a rare fall snowstorm. But the snow and cold didn't stop a small crowd of local and some state officials from gathering around a blaze on Sunday evening to celebrate the last payment to retire municipal debt in Bernards Township.
That last bond predated what Mayor John Malay and other members of the Township Committee said was the beginning of the township's move to "pay as you go" for municipal projects, whether road improvements, parkland investments, office equipment and other expenditures typically financed in many towns with municipal bonds.
Township Administrator Bruce McArthur has since last year been announcing that Bernards would achieve the milestone of being debt free in its municipal budget as of this November. The only borrowing that Bernards still must pay off are payments on open space land purchases, which are financed by a separate open space tax, according to township officials.
Those investments added up to about $65 million since 1991, McArthur calculated. Since municipal bonds, over 20 years, generally were paid back with about 50 percent interest added up during two decades, the township saved taxpayers about $30 million in interest payments during that time.
"Back in 1991, when Bernards twp. had 17,000 residents and was $21 million in debt, I’ll bet the popular feeling was that it’ll be a cold, snowy day in October before this town is debt free…they would have been exactly right," Township Committeeman John Carpenter said in his remarks, before officials jointly tossed the facsimilie of the bond into the roaring fire.
"The good news is that in 1991 Bernards stopped borrowing and embarked on a 20 year journey towards freedom...from municipal debt," said Deputy Mayor Mary Pavlini.
Pavlini also referred to the last 20 years of "pay as you go" capital expenditures of $65 million on everything from roads, to fire trucks to lawn mowers, to a major library expansion. She also quoted the approximation that $30 million in funds that would have been spent in the municipal budget were saved.
"The residents will reap the benefits [of those savings] for years to come," Pavlini said.
Malay also credited previous Township Committee members who had initiatd the "pay as you go" concept of budgeting even for large expenditures, rather than borrowing.
N.J. State Sen. Tom Kean, Jr., who represents the 21st district, said that Bernards Township is the only municipality he knows of within New Jersey that is debt-free.
"This should be a model for the state," Kean said.
State assembly representatives for the 21st district Jon Bramnick and Nancy Munoz also attended the bond fire. On the chilly night, Bramnick said he had spent the previous few days pushing both JCP&L and PSE&G to attend more quickly to power outages in his area of the state — and also Bernards Township, which officially becomes part of the 21st district as of January 2012.
Kean, Bramnick and Munoz, all Republicans, are seeking re-election this November to represent the 21st district. Pavlini and Carpenter, also Republicans, are seeking additional third terms on the Township Committee, and are running against two Democratic candidates. Kean, Bramnick and Munoz also face Democratic opponents.
Some residents also gathered around the blaze, including Ridge High School sophomore Samantha Cordasco, who kicked off the relatively brief festivities with her rendition of the Star Spangled Banner.
"Allergy" to debt
McArthur started the ceremony by talking about his father, born in 1910 in the house that now serves as the Bernards Township community center on South Maple Avenue, hated to be in debt.
"Somehow, I inherited his God-awful allergy to debt," McArthur said. McArthur, now CFO, said he has worked in the township's finance department, for 25 years.
He said that most items financed by 20-year bonds are in the junk heap before the end of that time.
McArthur, a lifelong township resident, said that he himself had burned the last of his student loan papers and other mementos of debt during the years.
He said he wished his father could have been at the bond fire. "He loved Bernards Township, he loved his freedom and he loved a good fire," McArthur said of his father.