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Commission considers removing special carve-out for tax anticipation notes in borrowing language
Summary
The commission debated whether the revised charter should treat tax anticipation notes differently from other bonds and notes. Staff recommended deleting the special exception to avoid ambiguity and potential bond-rating concerns.
Commissioners and finance-focused speakers discussed proposed borrowing language and whether the charter should include a specific exception for tax anticipation notes.
Background and debate
The draft charter language proposed to treat issuance of bonds and notes generally as requiring authorization by resolution of the board of selectmen, but it included a sentence creating an exception for tax anticipation notes. Some commission members, citing concerns about bond-rating agencies and fiscal tools available for cash-flow shortfalls, asked why tax anticipation notes were singled out. Finance-focused participants said rating agencies view tax anticipation notes as a short-term liquidity tool and the existence of authority for such notes can be valuable; others said putting a specific carve-out in the charter is unnecessary and may create ambiguity about whether the town manager could issue such notes without selectmen or board of finance approval.
Staff recommendation and commission direction
Town staff recommended deleting the five words that singled out tax anticipation notes, which would leave issuance of all bonds and notes subject to the same approval and authorization rules. Supporters of deletion argued that removing the carve-out would not prevent the town from issuing tax anticipation notes when appropriate, but would keep the approval process consistent and transparent. Commissioners asked staff to confirm the legal and practical implications with bond counsel and to clarify which board(s) would need to authorize short-term borrowing in an emergency.
Outcome
The commission agreed to remove the specific exception for tax anticipation notes from the draft and asked staff to consult bond counsel and present revised language clarifying approval thresholds and which officials would authorize short-term and long-term debt.
