SALEM - The city will be able to pay off much of the money it borrowed to expand and renovate the Witchcraft Heights School, thanks to a bill that passed the state Legislature last week.

During a flurry of activity before recessing for the summer, state lawmakers voted to resume paying communities money owed for school building projects under the School Building Assistance program. The state will clear about 420 projects from the program's wait list by borrowing $1 billion and setting aside a portion of the state's sales tax.

By taking the action, both the state and local municipalities save money.

In Salem, the state has agreed to pay 90 percent of the principal and interest for the Witchcraft Heights School expansion and renovation project. Paying the debt off only a few years into the 20-year bond saves both governments a significant amount in interest charges.

Officials in Salem were paying close attention to the bill as it made its way through the Legislature. When crafting the city's fiscal year 2005 budget, Mayor Stanley Usovicz and his staff projected that the law would pass and the city would receive a $1 million payment for the state's portion of the interest.

If the bill had not passed or if it is vetoed by the governor, which is unlikely, Salem would have a $1 million deficit this year.

"We took the middle-road approach, conservatively, and our position came through," said budget director Bruce Guy.

The city will now be able to pay off 90 percent of the $19 million project. The remaining 10 percent - about 1.8 million - is still the city's responsibility and will remain bonded, Guy said.