News

By Matt Sturgis

The Town Council of the Town of Gray has placed a local referendum on the ballot for your consideration on November 2. This referendum was crafted in direct response to the potential impact upon Gray of the Property Tax Cap Initiative. In many ways one could describe this as a preventative measure in case the Cap passes, enabling the Town to meet its financial obligations to its creditors outside of the one percent tax rate limit. The local referendum is a blue ballot.

This referendum is brought before you to ask for the Town of Gray to re-ratify already approved debt. The Tax Cap Initiative states that any debt approved by the voters prior to July 1, 1999 would be exempt from the property tax cap, and any debt approved after July 1, 1999 needed to be approved by a two-thirds majority of the votes cast in a general election. General Elections are elections that take place on even numbered years, when we elect the Governor or President. The Town of Gray has debt that existed prior to and after July 1, 1999, and all of the debt was approved at Town meetings, not at General Elections. This local referendum gives Gray the opportunity to re-ratify its existing debt at a General Election, and if passed by two-thirds majority, would place our existing debt payments outside of the cap. This referendum does not authorize any new debt.

Why do we have DIRECT debt, and what is it? Direct debt is the debt approved by the People of Gray at a Town meeting. Direct debt would be bonds issued to construct the Salt and Sand Shed, Public Safety Building, and Library expansion and renovation.

Why do we have OVERLAPPING debt, and what is it? Overlapping debt is debt that the Town of Gray is obligated to pay on, but was not approved by the Town of Gray voters, or at a Town meeting, but we have no choice in paying on. Such issues would be debt issued by the County for the Civic Center that we must pay on, Gray Water District bonds issued for the TIF for the Route 100 water line.

Why do we include pre and post 1999 debt for re-ratification? The reason for including both is to preemptively guard Gray from challenges that may occur where debt that was approved by Towns at Town meetings may not be considered to be approved at an "election".

Why do we include direct and overlapping? The reason to include direct and overlapping is that regardless of how this vote turns out, the People of Gray are responsible to pay this debt. One may ask if the overlapping is operational expense? Well, yes it is, but so is paying our direct debt, however they both have a significant difference, with that being operational expenses are ongoing, while all of the debt, direct and overlapping have an end point at a specific point in time. As the bonds are paid off the debt is retired, and then it will come off from being above the cap.

What about contingent debt? The only contingent debt that we have resting out there that we do not know what that amount will be is the closure cost for the RWS landfill, which we have an obligation (additional debt) to assist in paying the closure cost of.

The information is provided in hopes of assisting your understanding as to the reason behind the local referendum, what our obligations are, and what the elements of the referendum mean.

Accompanying the referendum will be the Treasurer's Certificate, presented below for your information. Mitchell A. Berkowitz is the Town of Gray Treasurer.

TREASURER'S CERTIFICATE

The undersigned Treasurer of the Town of Gray hereby certifies:

--1. The intent of this question is to ask whether the Town's already authorized and --outstanding debt will be ratified and approved by the voters as an exemption to --the proposed statewide tax cap. It does not authorize any new debt nor can --current debt be eliminated by a negative vote.. Any debt --already exempt from --the statewide tax cap if enacted will remain exempt --regardless of the outcome of --the vote on this question.

--2. Bonds Now outstanding and Unpaid:------$ 431,499
Interest to be repaid on Outstanding Bonds:----$ 80,713
Total to be Repaid on Bonds Issued:------$ 512,212
Additional Bonds Authorized but not yet Issued----$ 158,322
Total Additional Bonds ( now proposed)------$ 0
Estimate of Potential New Interest:------$ 5,510
Total Additional Bonds to be Issued
and Estimated Interest already approved by Voters--$ 163,832

--3. The contingent and overlapping debt of the Town of Gray includes a $936,810 --share of the debt of Cumberland County, $2,674,473 of the Regional Waste --Systems, Inc .including the incinerator, materials recycling facility and landfill --closure costs, $1,782,900 of the Gray Water District debt incurred for the --extension of water lines in both the Rt. 100 and the Northbrook Tax Increment --Financing Districts and the MSAD#15 debt of $5,553,569. .

The foregoing represents and estimate of costs associated with the Town's already issued and outstanding debt and all authorized debt. The Town incurs the obligation of contingent and overlapping debt when it participates with another entity that borrows the funds for the services that will be provided to the Town. When money is borrowed by issuing bonds, the Town must repay not only the principal amount of the bonds but also interest on the bonds. The amount of interest to be paid will vary depending upon the rate of interest and the years to maturity at the time of issue. The validity of the bonds and of the voters' ratification of the bonds may not be affected by any errors in the estimates made of the costs involved, including varying interest rates, the estimated cost of interest on the bond amount to be issued, and the total cost of principal and interest to be paid at maturity.

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------------Mitchell A. Berkowitz, Treasurer
------------Town of Gray
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