Borough Could Sell Tax Anticipation Notes in '11

Based on current trends and the borough's financial situation, Madison Chief Financial Officer Robert Kalafut doesn't believe he'll have enough liquid money to make payments in April 2011.

With that in mind, Kalafut asked for–and received–permission from the Borough Council to explore the possibility of selling tax anticipation notes next year.

"Once the year ends I'll probably be discussing with council and Mr. (Borough Administrator Ray) Codey that I'll most likely have to make arrangements to sell tax anticipation notes," Kalafut said at a special budget meeting at Bayley-Ellard on Thursday.

"None of these numbers are going down. I don't believe I'm going to have funding in place to make the April (2011) payment."

Kalafut said with the continued depletion of the borough's surplus to keep the property tax levy down over previous years, he will not have the money readily available to make necessary payments. The anticipation notes, which currently have a very low interest rate associated with them, would allow the liquidity necessary to pay those bills, though it would cost the borough that interest.

Kalafut also said because of the depletion of the surplus over the years, the borough's CD program is over at this point. If the council eventually votes to sell the notes, the interest payments would begin in the 2012 budget. It would almost certainly be the first of a never-ending cycle.

"Once you start the cycle, you never stop," Kalafut said. "You are into it forever."

Kalafut reiterated to council that he wants liquidity in place which he currently does not have, before members of the council said they approved of looking into selling the notes.