Boardman borrows to get past 1st quarter

By Denise Dick

It’s not a budget issue but a cash-flow one, Trustee Larry Moliterno said.

BOARDMAN — It was a first for the township: borrowing money to get through the first quarter of the year.

Trustees voted 2-1 at an emergency meeting Thursday to borrow $3 million through a 90-day note from National City Bank. Trustee Kathy Miller voted against the motion with Trustees Larry Moliterno and Robyn Gallitto supporting it.

“Back in February, we talked about having to borrow money to get through the first quarter of this year,” said Moliterno, trustees chairman.

“We have known for a year that we would have to borrow money,” said William Leicht, township fiscal officer. “This is the first time that Boardman has had to borrow money” to get through a year’s first quarter.

It will likely be an annual occurrence, he said.

Though many communities regularly borrow money to get through the first quarter, it’s a first for Boardman. Voters last November approved a 2.2-mill police and fire levy, expected to generate about $2 million annually, but there’s a lag before the township receives that revenue.

Previously the township relied on its carryover, which had for many years been high because of substantial inheritance tax money. That money has been spent without additional large injections of new inheritance money in recent years.

Miller questioned the amount of borrowing and the need to conduct an emergency meeting to approve it.

“For me, why can’t we borrow less and get the budget under control?” she said.

Moliterno said it’s not a budget issue but a cash-flow one. Leicht said he anticipates the money’s being repaid quickly, hopefully before the 90 days.

“I don’t want this thing hanging out there,” Leicht said.

The note carries a 3.6 percent interest rate, and the township will put the borrowed funds in its Star Ohio fund, which has an interest rate of between 1.6 percent and 1.7 percent. Leicht estimates the net interest the township will pay at about $60,000, but that amount will be lower if paid off early.

“As soon as we start collecting real estate taxes, we’ll use it to pay down that debt,” he said.

Leicht said he asked for an emergency meeting to ensure payroll is met next week without difficulty.

The process to borrow the money had multiple steps.

At a regular meeting Dec. 10, trustees unanimously authorized Leicht to solicit proposals from financial institutions to allow the township to borrow. “In December, we started working with local banks,” Leicht said.

He said the township had to hire bond counsel to create the requests for proposals because the Mahoning County prosecutor’s office, the township’s legal counsel, doesn’t handle bond work.

The requests for proposals were sent to four banks, but only National City responded with the amount the township needed to borrow.

Though the township has a roughly $3 million carryover, some of those funds, such as the road and bridge fund and the gas tax, can’t be used for salaries and wages, he said.

Township officials believed that one of its certificates of deposit would provide funds but that money too is restricted in its use, Leicht said.

denise_dick@vindy.com