Caroline County is in the best financial position that it has been in since 2000 but would benefit from the adoption of fiscal policy guidelines, the county’s financial advisor Davenport and Company told the Board of Supervisors Nov. 12.
“The county has done a phenomenal job of being able to get itself back on firm footing with the fund balance,” Davenport senior vice president Courtney Rogers said.
Since 2005, the county’s unassigned fund balance—that portion of its coffers that is not committed to any specific purpose or goal, often referred to as its reserves—has fluctuated between a low of roughly $3.6 million in 2009 and a high of about $14.3 million in 2014.
Ideally, Rogers told the Board, at the end of any fiscal year, that balance should fall between 10 and 12 percent of the county’s net operating revenue for the next year, and, for counties such as Caroline that collect taxes twice a year, should never fall below 8 percent in order to meet ongoing cash flow needs, revenue shortfalls or unexpected events such as natural disasters.
At the low point of 2009, the county’s unassigned fund balance was 6.18 percent of revenues, compared to 20.59 percent at the high point of 2014.
On this measure, Caroline in 2014 fell in the middle of the range in the region, with counties such as King and Queen, Louisa and King George reporting higher percentages of reserves compared to revenues, and counties such as Spotsylvania, Stafford and King William showing lower figures.
“We had a good year,” County Administrator Charles Culley told the Board.
As always, debt was a major topic of conversation Nov. 12.
Rogers identified two primary goals for the county’s debt management: first, tax-supported debt should not exceed 3 percent of the county’s total taxable assessed value, and second, tax-supported debt service should not exceed 12 percent of the county’s revenues.
Currently, Caroline’s debt sits at around 2.75 percent of the county’s assessed value, and its debt service hovers near 13 percent of county revenues—a little above Rogers’ identified target, although he noted that the percentage is expected to decrease over the next few years.
Overall, the county’s total school and general government debt, encompassing both principal and interest, sits at $129 million, with utility debt constituting an extra $39.8 million.
Western Caroline Supervisor Jeff Black objected to the separation of the utility debt from the report, saying, “We’re a growing county … but at the same time, we’re kind of ignoring a big factor of our debt.”
According to a Nov. 1 report on Caroline’s debt posted on the county website, schools represent the largest slice of the county’s total debt, at 45.1 percent. Public utilities come in second, at 31.28 percent, with general government taking up the remainder.
Madison Supervisor Wayne Acors urged the Board to not “lose sight of the fact” that increased revenues from commercial development “would not be possible if it was not for the water and sewer that we have run through the county.”
Looking at short-term needs, Rogers pointed Nov. 12 to a rate resetting of the county’s existing series 2005 bond and the purchase of a new fire truck and 10 new Sheriff’s Office vehicles.
The Board unanimously agreed to direct Davenport to issue a request for proposals for the purchase of a series 2015 bond through a direct bank loan in order to find out what interest rates might be available to the county.
The company is expected to present the responses and its recommendations to the Board at its upcoming Dec. 8 meeting
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