With a split vote, the Council did not move to lock in the interest rates for its current debt from bonding at its July 14 meeting.
By not passing the resolution, the borough will budget approximately $150,000 for the next principal payment as opposed to $104,000, a difference of $46,000.
Council members Neda Rose, David Jordan, and James Delaney, all Democrats, voted to pass the resolution. Independents Beatrice Robbio, David Weschler, and Denis Gallagher voted against it. Usually the mayor can break a tie, but not in this case.
Borough Auditor Steve Wielkotz presented the Council with a plan at its May meeting to lock in the current rate of approximately 4 percent for the next 15 years. The other option was to continue with the current payment schedule and, hopefully, get a lower rate later.
Borough Bond Council William Maher said it could a good time to lock in on a rate.
"No one really know what interest rates will be," Maher said in May. "The bond market is very volatile."
.When the presentation was made in May, the Council took an informal consensus, since Maher would need to have the resolution in place to go in front of the New Jersey Local Finance Board this month. At the time the Council said to start preparing it, but some members changed their mind when it came time to vote at the meeting.
Maher told the Council that he heard before coming to the meeting that not everyone was still in agreement and tried to answer whatever questions the Council had.
Weschler said he wasn’t comfortable with the proposed plan to lock in the rates and wanted to see the borough pay more in principal payments, rather than so much in interest throughout the years.
Mayor Nancy Merse said that by locking in the rates the borough knows how much to budget each year.
Jordan was upset that the resolution wasn’t passed after the informal consensus indicated that it would.
"Our finance experts prepared this plan," Jordan said. "So if [the opposing council members] have another plan, what is it?"
Borough Administrator Greg Franz said that hopefully interests will go down or remain steady but said they may also go up.
"Best case scenario, it’s good that we held off and we may get a lower rate," Franz said. "But it’s a crapshoot with the rates."
Franz said the Council could revisit the option to lock in rates next year when it prepares the budget.
