Report details county’s debt service burden
MILFORD—A financial report prepared for the Caroline County Board of Supervisors shows the county government’s debt is higher per capita than most other nearby localities.
Fran Hatcher, the county’s finance director, prepared the report and presented it to the supervisors at their regular Jan. 22 meeting.
As of Nov. 16, 2012 the county’s debt was $117,701,808, according to Hatcher’s report. In March 2010 the county’s debt was at $89,210,717.
The increase was due largely to a jump in utility fund debt from $23.6 million to $44 million in order to finance an expansion of the county’s wastewater treatment plant. In addition, debt for schools increased from $33.6 million to $39.6 million due to renovation projects, and general government debt increased by $2.1 million to $34 million.
Hatcher’s staff gathered data from surrounding counties, and the most recent data available for total county debt was June 30, 2011. Caroline’s per capita debt was $4,151. That compares to $4,057 for King George, $3,281 for Stafford, $3,109 for Orange, $2,203 for Hanover, and $4,391 for Spotsylvania. Fredericksburg’s per capita debt was $3,616.
The report did not include figures for King William, but the June 2009 per capita debt for King William was $2,060. Caroline’s per capita debt was $3,260 at the time while Louisa was at $932 and Westmoreland, $926.
Total debt for other counties ranges from $96.8 million for King George to $537.5 million for Spotsylvania.
Caroline’s debt service for the current fiscal year is expected to be $9.59 million, according to the report. However, the county’s debt service is expected to rise to $10.29 million for fiscal year 2013-14 and continue rising until it reaches $14.6 million in 2016-17. Debt service is expected to drop to $8.2 million in 2017-18 and to $7 million by 2020-21.
A state agency that provides bond financing for local governments rejected a request by the county to refinance existing bonds a year ago. The county’s application to the Virginia Resources Authority (VRA) was turned down because of its financial condition and increases in debt service expected in the future. The county was expecting to refinance the bonds at a lower interest rate and save money.
The county will continue to face challenging times in fiscal year 2013-14, according to a five-year outlook prepared by its financial advisory firm, Davenport & Company, and County Administrator Charles Culley. The county will be paying for a new $6.5 million radio system, which is required by the Federal Communications Commission, and the annual debt service payment for it may be $630,000. If financed by Motorola, however, the first payment may not be due until fiscal year 2014-15.
Also in the next fiscal year the county will probably have to lease new school buses and sheriff’s vehicles at a cost of $1.09 million, and the annual payment would be $195,000, according to Davenport’s report. The county also may need to lease a new $500,000 fire truck, and it needs to drill new wells that would cost an estimated $500,000.
With its debt service increasing, the county would have to obtain more revenue from real estate taxes, sales taxes, or other sources. For example, the $630,000 annual payment for the radio system would be equal to another 2.54 cents on the real estate tax rate, which is currently 72 cents per $100 in assessed value.
In fact, Davenport projected the county will need new, additional revenue equivalent to a 13.4-cent increase in the real estate tax rate in the next fiscal year – whether the revenue is raised from real estate taxes, personal property taxes, or other taxes or fees.
Caroline’s real estate tax rate was as low as 48 cents in 2006, but that was after a reassessment drove property values higher. The most recent reassessment was in 2011.
In the current budget, one penny of the real estate tax rate generates $245,683 in revenue.
Davenport expects the county to conduct its next reassessment in 2015. An increase in property values of 1 percent would provide the county with $180,000 in additional revenue for fiscal year 2015-16 and beyond.
The county faces other significant costs, too. The supervisors and the School Board have been assembling a citizens panel to help guide a major new project to expand and renovate Caroline High School, which would cost in the range of $20 million. Improvements planned for Madison Elementary School would cost an estimated $3 million. The county may need to undertake a major water supply project that could cost in the neighborhood of $20 million. The county may expand its solid waste convenience site in Ladysmith for $200,000, and it is making plans for a new ambulance for $150,000.
The weak economy of recent years has hurt, noted Culley. “Few people in government have dealt with this type of economic downturn,” he said. “I’ve been in government for 26 years and nothing I’ve seen has been this long and strong and with unemployment this high.”
The total taxable value of residential, commercial, and agriculture property in Caroline County dropped from $2.86 billion in 2008 to $2.46 billion in 2012, according Sharon Carter, the county’s commissioner of revenue. It may be inching back up because it was $2.43 billion in 2011.