(Beaver Dam) City officials in Beaver Dam continue to hold discussions on changes to their debt cap policy. In 2010, the council set limits for annual borrowing at $1.6-millon dollars, unless three-fourths of the council votes to exceed that number, which is eleven of 14 alderpersons. Two years ago, the council agreed to adjust the cap for inflation, bringing the 2021 limit to just over $1.7-million dollars. The Capital Improvements Plan in recent years has been well above the self-imposed maximum, with the upcoming year’s borrowing at nearly $6-million dollars. City Finance Director Zak Bloom is proposing that the city move away from a debt policy based on a fixed dollar amount and instead focus on a percentage of the debt capacity allowed by the state.
Bloom says among the reasons to eliminate the fixed dollar amount is because the needs for the city are more significant that the dollar amount addresses.
Under the proposed policy change, the city would be held to borrowing up to 65-percent of the maximum borrowing allowed by state statute. He says it is important to incorporate metrics that are used by Moody’s Financial services in setting the city’s bond rating. Bloom says the parameters in the current policy have nothing to do with how the city is rated.
With next year’s projected borrowing, Beaver Dam would be at 47-percent of its available $65.3-million dollars in debt capacity, which translates to another $30-million dollars in available borrowing. As the city acquires more debt in a given year, there is also debt that is retired. Wisconsin Statutes requires general obligation debt outstanding not exceed five percent of the equalized valuation of the taxable property in the city. The city council will be considering the debt cap policy change at their December meetings.