Debt ceiling debate puts local bond refunding on hold
Citing the impasse in Washington over raising the debt ceiling, Ocean County officials will postpone a refunding of bonds and the new general obligation bonds sale that had been scheduled for Aug. 9.
“Washington’s inaction could have a major repercussion in the financial industry,” said Freeholder John C. Bartlett Jr., who serves as liaison to the Ocean County Department of Finance. “With that, I am recommending we hold off on our bond sale and refinancing until this matter is resolved in Washington. We would be well-served to hold tight until we see what’s what.”
Bartlett made the recommendation during a preboard meeting of the Ocean County Board of Chosen Freeholders on July 27.
Ocean County had expected to save $1 million in interest as a result of refinancing about $35 million in bonds that were issued in 2004 and 2005 when the interest rate was over 4 percent on the money borrowed by the county.
“We expected that our new interest rate would be about 2.4 percent, saving about 1.7 percent which equates to $1 million in savings over the life of the issue,” Bartlett said. “But given the unsettledness of the situation now is not the right time to proceed with this.”
Projects funded by the $35 million in general obligation bonds include upgrades to the county’s communications network, construction of portions of the Barnegat Branch Trail, reconstruction of Long Beach Boulevard, the Ocean County Jail expansion project, the Southern Ocean County Government Complex off Haywood Road in Stafford Township, construction of the Ocean County Airpark Terminal, Jakes Branch County Park in Beachwood and various county road improvement projects.
“These projects are the bricks and mortar projects, they will be used for a very long time,” Bartlett said.
Bartlett raised concern over the inaction in Washington over raising the debt ceiling and the question of whether Washington can pay its bills.
“There is no telling what results this might have. The interest rates may go higher,” he said. “We need to see a comfort level in the financial market and that is not there right now.”
Bartlett said the projects that would be covered by $26 million of new general obligation bonds would continue to move forward.
“We have a cash flow to support these capital projects,” Bartlett said. “Ocean County is not in a cash bind. This is why it is prudent to have money in surplus.”