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Debt Exclusion Explained

This post submitted by The Board of Selectmen:

The Board of Selectmen placed two debt exclusion questions on the April 23rd Town Election ballot: Wayland High School (WHS) athletic complex renovation and Loker turf field construction. Voters passed debt exclusion funding a year ago on these projects, but no action was taken at Town Meeting, so residents need to vote again. On April 23rd, voters will see three questions on the ballot, two of which are the debt exclusions addressed here. We thought it would be helpful to answer some common questions on the process.

What is a debt exclusion? A debt exclusion vote allows a town to raise tax revenue in addition to that generated under the Proposition 21⁄2 levy. (The levy limit is the total overall amount any community is allowed to raise through taxation. Proposition 21⁄2 limits the annual increase to 2.5% plus new growth plus increases in assessed value of property.) These additional tax revenues pay for debt (principal and interest) borrowed for a specific purpose. In this way, a town can build a school or other building and not fund it from its existing revenues. In other words, a debt exclusion is a means of funding a particular project(s) with a temporary increase in the levy limit. The debt is excluded from (that is, exempt from) the levy limitations of Proposition 21⁄2. Debt exclusion is a tool that towns use to show voter commitment for projects and willingness to support them financially.

How does a debt exclusion differ from an override? Both are Proposition 21⁄2 questions and, in municipal finance language, both are technically overrides. However, there are some basic differences. While both will increase your property taxes, a debt exclusion is a temporary increase while an operating override is a permanent increase in the town’s tax levy limit. A debt exclusion finances a particular project(s) and your taxes increase for a period of time, usually 10-20 years, to cover the cost of the project. When the financing bond is paid off, your tax increase for that project
goes away.

Why are there two votes – one at the polls and one at Town Meeting? A debt exclusion is required to pass two thresholds: a simple majority at the polls and a two-thirds majority at Town Meeting. This year, Town Meeting will vote on two articles related to the debt exclusion: Article 13 – High School Athletic Complex Renovation and Article 15 – Loker Turf Field Construction.

What does voting “yes” on a debt exclusion question at the ballot mean? A “yes” vote only allows the Town to use excluded debt to fund a project. A “yes” vote does not mean approval of the project; that only happens at Town Meeting with the appropriation. There is no dollar amount shown in the ballot question(s). The project still needs to pass at Town Meeting with a two-thirds majority vote for borrowing, and the articles at Town Meeting ask for a specific dollar amount in the appropriation.

What does voting “no” on a debt exclusion question at the ballot mean? A “no” vote means the Town cannot exclude or exempt the debt from the levy. The project/article can still be considered at Town Meeting even if it does not achieve a majority at the ballot, but the debt would be “regular” or non-exempt debt. A two-thirds majority is still needed to pass the article at Town Meeting if it is funded with borrowing. The Board of Selectmen and Finance Committee both recommend funding these projects with excluded debt.

What happens if a “no” vote prevails at the ballot, but Town Meeting passes the article WITH debt exclusion funding? The Board of Selectmen would need to decide whether to call another special election/ballot. The decision to use excluded debt must pass at the ballot, but this vote can happen after the vote on the article at Town Meeting.

What does the Town’s financial advisor and Moody’s think of debt exclusions? Both the Town’s financial advisor (Unibank) and the Town’s credit rating service (Moody’s) state that large capital projects are better funded with debt exclusions (excluded debt). This is not support for any particular project, but rather a preference for the funding mechanism for any one of the large capital projects.

What are the questions on the April 23rd ballot? This year the Town is being asked to consider three ballot questions. Question 1 relates to the prohibition of recreational marijuana establishments in the Town of Wayland, which is not a debt exclusion question and therefore is not being addressed in this article. Questions 2 and 3 are debt exclusion questions

Ballot Question 2: Shall the Town of Wayland be allowed to exempt from the provisions of proposition two and one-
half, so called, the amounts required to pay for the bond issued in order to pay for the design, permitting, engineering, reconstruction and construction of the Wayland High School Stadium Complex Renovation and Tennis Court and Softball Field Reconstruction, including the replacement of bleachers and lighting, as described in Parts 1 and 2 of the Wayland High School Facility Strategic Master Plan (High School Athletic Preferred Improvement Plan), including any and all other costs incidental or related thereto?

Ballot Question 3: Shall the Town of Wayland be allowed to exempt from the provisions of proposition two and one-
half, so called, the amounts required to pay for the bond issued in order to pay for designing, permitting, engineering and constructing a multi-purpose synthetic turf athletic playing field at the Loker Conservation & Recreation Area, including playing surfaces, lighting, drainage, landscaping, recreational amenities, access and parking areas; and any and all other costs incidental or related thereto?

Where can I find more information on the upcoming votes? The 2019 Annual Town Meeting Warrant should have arrived in your mailbox. It is also available on the Town of Wayland’s website. For more information you are welcome to attend the Warrant Hearing on Monday, April 22 at 7:30 pm in the Wayland Town Building.

Wayland Board of Selectmen
Lea Anderson
Mary Antes
Louis Jurist
Cherry Karlson
Doug Levine

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