THE ISSUE
The Berwyn City Council recently issued $5.2 in bonds to retire old debt and put $3 million into the budget.

OUR VIEW
Aldermen should have continued to pay off the debt they had and not taken on additional debt to balance their budget.

SPEAK UP
Did members of the Berwyn City Council make a wise decision to retire their old debt by issuing new bonds? Tell us what you think of this by leaving a comment below. You can also e-mail your comment here. Or leave a voice message at (630) 368-8882.

At first glance, it appears that Berwyn officials struck quite a deal by refinancing $4.8 million in debt.

They’ll save $3.3 million in payments that would have to be made by the end of this year, and this money can be put back into the budget. They also obtained an interest rate of 4.75 percent for the bonds they issued, which would have been higher had the city not maintained its A-minus bond rating.

At their Oct. 13 meeting, members of the City Council approved issuing up to $15 million in bonds, but the Finance Department advised cutting that amount to about one-third. The $5.2 million in bonds issued, to be retired within 20 years, paid off the rest of the old debt.

This refinancing of debt is not uncommon; homeowners do it all the time. They put cash in their pockets by negotiating a better rate on their mortgage.

For those who own property to do this, however, is far different than for governmental bodies to engage in this process. The homeowners are dealing with their own money; public officials are throwing around money from taxpayers.

To pay off the $4.8 million in debt, the Berwyn City Council issued $5.3 million in bonds. Over the 20-year life of the bonds, the principal and interest will cost the city a tad less than $10 million, said Finance Director John Wysocki.

There is no doubt that Berwyn aldermen can use the $3.3 million in the city’s budget. But does it really make sense for the city to double its debt so it has more revenue to use this year?

What happens if officials face another budget shortfall next year? Will they again consider taking on additional debt so they can avoid the painful yet necessary cuts to balance their budget?

Consumers are being told that the best way to manage their money now is to pay down the debt they have. Berwyn aldermen should have adopted the same mindset and gotten rid of what they owe. When throwing around taxpayers’ money, officials must be as prudent with it as would their constituents.