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#47. TOWN OF LUNENBURG POLICY
DEBT CHARGES
I.
PURPOSE
The objective of the following Policy is to provide a base
guideline for use by Town Council each year to determine the
maximum amount of Capital Borrowing with respect to measuring
the impact on total debt charges within subsequent years'
Operating Budgets.
II. POLICY STATEMENT
1.
It is desirous that funding of capital projects be done
on a rational and prudent basis.
2.
It is recognized that from time to time it would be
feasible to finance certain capital budgets by a long
term borrowing.
3.
The amount of funds borrowed for capital budgets in one
year results in a significant impact on subsequent years'
operating budgets in terms of principal and interest
payments and that debt charges also restricts the amount
of funds available for general operating expenses.
4.
That it be the established policy of the Town Council of
the Town of Lunenburg that no capital expenditures be
financed by a capital borrowing in any given year if the
projected debt charges, including both principal and
interest when added to the previously incurred debt
charges results in a total debt servicing charge in the
following year of an amount greater than 12%
(twelve
)
tax
for that
ar year.
5.
The Director of Finance/Treasurer shall include with the
annual operating and capital budgets in any given year a
schedule of projected debt charges for the current and
subsequent year including the projected ratio of debt
charges to tax revenue for the current and subsequent
year.