LEWISTON — Councilors on Tuesday said they liked a plan designed to ratchet down city debt slowly, over decades.
“What makes this important is just some of the concern we’ve had with the city’s debt over the last few years,” said Councilor Robert Reed, a member of the city’s Finance Committee
The committee recommended a new borrowing policy to councilors at Tuesday’s meeting. According to that policy, the city couldn’t borrow more debt than it had paid off. It would be limited to borrowing 97 percent of the average debt paid off over three years.
That wouldn’t include debt that would be repaid by the state – bonds used to build a new school, for example – and the seven-member council would need a five-vote majority to override it.
The city currently has about $140 million in outstanding debt, said Finance Director Dick Metivier.
Overall, the city paid off about $6.4 million in principal for capital spending, the schools and the Androscoggin Bank Colisee in fiscal year 2008-09, $5.9 million in 2007-08 and $5.3 million in 2006-07.
Based on the proposed policy, the city would be allowed to borrow about $5.9 million this year.
That’s a fair amount, Metivier said.
“From a fiscal management point of view, it’s a sound policy,” he said. “Bond rating companies typically look for cities that have policies to limit their debt.”
Councilors agreed but said they were in no hurry to adopt the measure. City Administrator Jim Bennett said he would bring it to councilors for a vote in August or September.
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