Mayor and Village Manager confirm Village could double the debt...

The Village Manager was a guest speaker at the Chamber of Commerce meeting held Wednesday morning, March 25th. Orland Park Mayoral candidate Gerald F. Maher was also in attendance.
Speaking to the Chamber audience, the Manager confirmed the Village intends to move forward with the Main Street Triangle Project. When asked by a chamber member how the village planned on funding this project, the Manager stated the Village would borrow the money. He explained that the current (direct) debt is at 4% and the village could take the (direct) debt up to 8%. The Manager re-confirmed that the only way the village could move forward on this project was via borrowing.
In an interview the next morning, March 26th, with Gerald Maher
SouthtownStar, the mayor confirmed the village was comfortable with the current debt level, that he does not believe this is a “staggering” amount, and that he felt the current bond rating would allow the board to take the debt to 8%.
What does this mean? As we reported in our previous news letter, this would translate into a direct debt amount of $203,299,035 based on the villages EAV on Oct. 01, 2008. (See FY2009 budget pg. 49) Is this a “staggering” debt? This would translate into a yearly interest payment of @ $11,000,000 to 14,000,000 or more, assuming doubling the current debt service and depending on interest rates etc.
To put that into perspective, during his address to the Chamber of Commerce, the Village Manager advised that (some) Capital Improvements would have to be put on hold this year until funding becomes available. The entire Capital Improvement expenditures for FY2009 is $14,945,171. If we can’t afford to cover these expenses now, how will the village be able to afford $14,000,000 yearly interest payments?
One course of action the board has used in the past is to borrow more money to pay back previously borrowed money. With the series 2003 G.O. Bond (Oct. 29, 2003) the Board borrowed $14,570,000 to partially refund the outstanding Series 2000 bond. Then the board repeated this action with the series 2004 G.O. Bond (Dec. 2004) by borrowing $9,815,000 to partially refund the outstanding Series 1998 bond. (See FY2009 budget pg. 67)
You can see this is leading to an ever increasing percentage of the budget being devoted to debt service which is Interest Payments on Borrowed Money.
We can’t borrow our way out of debt. From 1999 thru 2008 the board has increased the debt from $19 million to $94 million with a proposed $14 million more in 2009. Now, they are contemplating taking the debt to $203 million. This is a burden that every resident and business will have to pay, in the form of increased taxes and increased fees, and at a time when the economy is stagnant or shrinking, not growing. This is not the path our village should be taking.