New London — The city’s finance director this year will recommend the creation of a capital reserve fund as an attempt to slow the rate at which the city has been borrowing money.

It’s not a new idea but something the city has gotten away from in recent memory as budgets have tightened, Finance Director Don Gray said.

A good rule of thumb, Gray said, is to not bond for anything that has a life span less than the time it takes to pay back the bond. The city would benefit from budgeting for capital items that either are not purchased right away or for items that do not have a long life span, he said. One example of a recurring capital expenditure is police vehicles, which have a life of about five years.

“Putting money into the capital reserve is going to lessen the number of things we’ve been bonding in the past,” he said. “Just because the interest rate has been low doesn’t mean you go out and use your credit card to create a big balance. We have to keep our mind on the taxpayers.”

The move is something City Council members have asked for in recent years, as bonding requests have increased for everything from outdated police and fire equipment to a $1.1 million request in 2014 to bolster the city’s diminishing fund balance.

This year’s capital improvement plan included $4.6 million in borrowed money, mostly for public works projects that included road and sidewalk repairs but also a fire department ambulance and firetruck.

“We need to start disciplining ourselves and not borrow money except for things that are true capital expenses,” Mayor Michael Passero said. “Right now the plan is to transfer a lot of stuff back into each department's operating budgets.”

Just how much the city will be able to set aside is another question with another tight budget expected. Passero said the fund at least needs to get started.

Councilor and Finance Committee Chairwoman Erica Richardson said it was an “absolutely great idea,” but was skeptical of there being enough money to set aside in the upcoming budget deliberations. She said the city is at the same time trying to bolster its severely depleted fund balance — no small task within the constraints of the budget each year.

“Let’s hope it can get it done. Lord knows it’s been recommended,” Richardson said. “That would still mean we have to tighten our fiscal balance. We need services to be expanded in public works. I don’t think people mind paying taxes if they see results ... schools maintained, sidewalk in good shape, streets getting plowed. It’s when you pay taxes and are not seeing the services. That’s when people are unhappy.”

Gray said an additional reason for pulling back on the amount of borrowing is the fact that city has yet to feel the impact of the $165 million in bonding residents approved in 2014 for construction of two new schools.

The City Council last year approved a $45.9 million general government budget and an additional $42.4 million toward the school district's $64.4 million budget.

 g.smith@theday.com