Council passed a resolution authorizing the township to borrow a currently undetermined amount of money due to uncertainty regarding various revenue streams during the COVID-19 pandemic.
“Due to the high level of uncertainty surrounding the township’s receipt of tax and miscellaneous revenue streams, the township desires to authorize the issuance of its tax anticipation notes in one or more series from time to time in an amount not to exceed $53 million,” officials said in the resolution.
According to Business Administrator Tom Cardis, the township is permitted to borrow up to $53,120,035.92 under state law. The number is reached by adding 30 percent of the tax levy and 30 percent of the amount of miscellaneous revenues received in cash the previous year, according to Cardis.
The resolution passed unanimously.
Before the sale of the tax anticipation notes, the township’s Chief Financial Officer must prepare a cash flow forecast in keeping with the township’s budget requirements, showing the anticipated deficit.
While the township’s maximum borrowing power is approximately $53 million, Cardis said the township does not anticipate borrowing anywhere near as much as legally allowed.
“That’s the township’s maximum borrowing power; not the school’s, not the county … just Gloucester Township specifically. We won’t be borrowing anywhere close to that amount, not even close,” he added.
“This report calls for a calculation of the maximum allowable amount that may be borrowed,” Cardis continued. “We do not anticipate getting anywhere near that number and we are only going to issue tax anticipation notes based on what needs we have for the essential services that we have to pay for.”
Cardis said he is unsure how much the township may borrow for the municipality’s use. But as the pandemic continues and schools remain closed, the administrator explained that the township may need to borrow money to help both Gloucester Township Public Schools and the Black Horse Pike Regional School District.
Under state law, school districts are only allowed to issue tax anticipation notes from July 1 to the end of the calendar year each year; as a result, the township may borrow on the township’s behalf and provide schools with funds for the time being. The schools would then be expected to pay back to the township.
“It’s a unique situation,” Cardis said. “I’m not exactly sure why that’s in place … But that might necessitate the township stepping in and using their borrowing power and fronting the money to the schools.”
Cardis said that move would be an option if the township is still not receiving taxes for the May quarter after several weeks. If the township did borrow money to help the schools, the schools would be responsible for paying the township the principal amount plus interest.
Since the township is able to borrow several tax anticipation notes, Cardis said he anticipates that if it deems it necessary to borrow to help the schools, the township would borrow tax anticipation notes separately for each entity. Separate notes would be issued for use of the township, the local school district and the regional school district, for three total notes.
Also on the agenda was the extension of a temporary budget. The township has until April 28 or it’s next regularly scheduled meeting to introduce its budget, which the township is still putting together.