For those of you that may have missed it in my previous coverage of the Board of Supervisors meeting on January 23, 2018, I was appointed to the Citizen Budget Advisory Committee by the Board of Supervisors. On January 31, 2018, I attended our first meeting and was generously granted the opportunity to sit at the table with the Board of Supervisors, County Administrator (Neiman Young), several County employees, and fellow citizens serving on the Committee. What follows will be my report from that meeting.
But before I get into the report, I want to get a few things cleared up. First, I'm labeling this article as an opinion piece because I will be including a lot of my opinion in it. Second, unlike my coverage of the Board of Supervisors and Service Authority meetings, I'll try not to be so dry and technical in my writing style. But it will still be a long report. Finally, if anyone has questions, comments, or concerns, I recommend you reach out to your representative on the Board of Supervisors or on the Citizen Budget Advisory Committee. I'll list their names at the end. And before you reach out to your representative, keep in mind that this Committee is ONLY for the Board of Supervisors budget and NOT for the Service Authority budget NOR the School budget. While all three budgets may be related and linked together, they are handled differently.
The first thing that I noticed about the meeting, and was able to confirm later at the end of the meeting, was that this was an open discussion, productive, and educational. Unlike most meetings I've attended in my life, I was able to walk away feeling like I not only contributed but also learned something. I hope to share as much of what I learned as possible.
Before the meeting progressed very far, Ruby Brabo nominated and the Board voted and approved Renee Parker as the citizen representative on the Committee for the At-Large district.
The first thing Dr. Young, our County Administrator, did was give a State of the County presentation. As he does at a regular Board meeting, he read from his notes and gave a solid presentation. But unlike at Board meetings, several of us interrupted him at various points to ask questions, to raise concerns, or to make statements.
Breaking into a few of the key takeaways from his presentation, it was interesting to note that the metrics he listed for 2017 included four capital projects. Of those, three of them (Route 3/301 water extension, High School track, and a new fire engine) were cash funded and incurred no new debt to the County. Only the Middle School expansion added to the County's debt (roughly $20 million). I'll get more into the debt situation in a minute.
Dr. Young then explained how the County's credit rating was obtained. It wasn't strictly finances as I had assumed but instead looked at the County as a whole. Yes, finances were part of the math, but the credit agencies also looked at the stability of the County. In other words, things like the leadership, employees, cooperative relationships with other entities, etc. The overall theme though was "develop or die." The best analogy I could walk away with was something my parents always told me when I was growing up as a teenager. While they wanted me to go to college, even expected me to go, they would be okay if I didn't. But if I wasn't in school, I had to be working a job. I had to contribute to the family in some way, either financially or by bettering myself. Very similar to what I mean by "develop or die" in that the credit agencies expect the County to grow or make improvements in some form or fashion. And when that doesn't happen, lower credit ratings happen.
Getting into the financial aspect of the presentation, the key word was debt. Young looked at comparable Counties both in our region and of a similar size and found that despite how bad our debt may seem, it's not as bad as many people think. As he summarized at the end, he said our "house is not on fire" and that the debt was manageable but cautioned that our "appetite for capital projects is insatiable." In other words, there is hope of getting out of debt. But just like paying off that credit card debt or home mortgage, there are trade-offs and costs associated with that.
Comparing the County debt to my home mortgage was the best way I could think of to make sense of it all. Most, if not all, mortgages have a principal portion and an interest portion of the payment. In other words, for every $100 you pay on your house payment every month, $80 goes to pay off interest and only $20 pays off the principal. The same thing with the County debt, except the numbers are much larger. So while we have about $80 million in debt, we have $33 million in interest. And just like a home loan, we can pay down on the principal to reduce the interest, therefore reducing our overall debt. One shocking tidbit of information was that if we did not use our landfill income to fund our projects, we would need to raise our tax rate 23 cents to cover costs. That goes back to support his comment about that insatiable appetite for capital projects.
As he progressed into his presentation, my education level about County finances increased ten-fold. Sure, I knew some of the County expenses were mandated by Federal or State law, but some payments are also mandated by previous agreements or contracts. But things got interesting when he began talking about income. First, I learned that the Capital Fund and the General Fund could not be combined or cross-pollinated. In other words, they aren't allowed to play with each other. But the landfill income portion of the presentation was what scared me the most.
Currently, the landfill has a lifespan of another 29 years. That's 29 more years of income the County can expect to get. Except 20 years of that income is already spent or allocated to be spent. In other words, we've already borrowed against two-thirds of that income. Not at all ideal. Especially when you consider that because the landfill income is funding the Capital Fund, we're looking at a dim view of capital improvements in 30 years. Unless we look at other sources of income before that well runs dry.
Which ties back to the debt and paying off the principal early. If we can manage to pay down the debt early, then we can use the landfill revenue early. Or save it for a rainy day. But it gives us more opportunities to be fiscally and financially stable going forward.
The hardest pill to swallow though was one of the options to paying down that debt early. As I said at the start, it'll cost us as citizens. And one of those costs may be no equalization. While many developers will tout our low real estate tax rates as a way to attract home buyers, it means lower income for the County coffers. While many citizens will tout our history of equalizing tax rates based on assessments, it's not necessarily true for the last decade. Although, admittedly, the last decade has been rather hard on real estate values in general. But if the County didn't equalize rates this year, it would mean higher mortgage bills for residents. It would mean, however, more debt principal being paid off for the County.
Now before anyone goes ballistic about increased bills, be patient. Remember, this was just a presentation and a discussion. Nothing is set in stone. It's just an option on the table. And as I learned, the County is required to hold a Public Hearing if their income is more than one percent over their projected amount. In other words, something like this (meaning no equalization) would require a Public Hearing. So residents can voice their opinion for or against that option. Currently, our tax rate is $0.70 cents per $100. If the County equalized, it would drop to $0.67 cents. But just like raising rates, a Public Hearing would need to be held and the County would need to hear from residents on what that extra money is spent on. This was wildly educational for me as I always just assumed the County needed my permission, as a resident, to increase rates. I never knew it worked the other way too.
Transportation was another key discussion topic and Dr. Young said we were in what he called the "eye of the traffic congestion hurricane." In other words, that Route 301 corridor is forecast to have twice the amount of traffic in the coming decade and there are few, if any, plans to maintain or improve the road. So even though the Board of Supervisors is exploring the option of creating a Regional Transit Authority (RTA), as the home of a major thoroughfare, we need to plan for the future.
And that was probably the most important takeaway from the presentation. Future planning. It was again emphasized in discussing County Staff needs, capital improvement priorities, and potential future projects. I think most residents can agree that our County needs certain things such as a well staffed fire department but there are other needs that may be a little more obscure like a new accounting software system.
Wilma Ward, Director of the Finance Department, then gave her presentation on the County Budget. It was a fairly straight-forward overview of how each department completes a line-item budget and submits it to the County Administrator for review. From there, the Board of Supervisors reviews it before everything gets approved. As with any budget this complex, there are certain variables and changes that need to be made throughout the year as well as during the budget creation. The best example I know of is actually the School's budget. They may have a pretty solid guess on how many students will attend every year, but they don't know how many kids will move into or out of the district during the school year. And because their budget is partially based on their Average Daily Membership (ADM), it's hard to set certain amounts in stone for the entire year. The County is the same way. This is also true for income, largely from the State and Federal governments as their respective budgets are not finalized yet. In simple terms, we can't finalize our numbers until we get their numbers. And even when we do get their numbers, they may change them during the year thus requiring us to change ours.
Ryan Gandy, Director of Economic Development and Tourism, gave his presentation next. It was largely focused on reviewing feedback from County leadership, staff, and citizens in an effort to develop a vision for the future. Again, future planning was the cornerstone of the night. By reviewing his SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), the goal was to create a Vision Statement.
It was important to differentiate the Vision Statement from the Mission Statement as they are technically two different things. Personally, I've never seen much of a difference between them and have found common sense to be a much better mission in life. But over the years I've found that common sense doesn't always work and isn't very finite. So like civil, criminal, and tax law, there needs to be a concrete measuring stick to use. The current Mission Statement reads:
From 2018-2023, King George County will maintain a comprehensive economic development program that encourages controlled development and diverse revenue streams in order to manage our inevitable growth while preserving the historical, cultural, and rural character of our community.
While it may look like a boiler-plate mission, there are some key focal points that stood out to me like "diverse revenue streams" and "inevitable growth" and "controlled development."
One last thing I noticed during the meeting was that the mood was cooperative. While there were disagreements, I wouldn't say they were heated or disrespectful. They were simple discussions about complex topics where there were many sides to be seen. And as with any meeting dealing with complex issues, there's bound to be a difference of opinion. But the fact that everyone at the table was willing to listen and given the opportunity to voice their own opinion in turn gave me hope for our future work sessions.
In conclusion, or the tl/dr if you prefer, the meeting was productive and educational. Our debt is large but there are solutions. There are a lot of myths to be dispelled about our County's Budget. Future planning and a forward-thinking vision is key to our County's survival.
But before I get into the report, I want to get a few things cleared up. First, I'm labeling this article as an opinion piece because I will be including a lot of my opinion in it. Second, unlike my coverage of the Board of Supervisors and Service Authority meetings, I'll try not to be so dry and technical in my writing style. But it will still be a long report. Finally, if anyone has questions, comments, or concerns, I recommend you reach out to your representative on the Board of Supervisors or on the Citizen Budget Advisory Committee. I'll list their names at the end. And before you reach out to your representative, keep in mind that this Committee is ONLY for the Board of Supervisors budget and NOT for the Service Authority budget NOR the School budget. While all three budgets may be related and linked together, they are handled differently.
The first thing that I noticed about the meeting, and was able to confirm later at the end of the meeting, was that this was an open discussion, productive, and educational. Unlike most meetings I've attended in my life, I was able to walk away feeling like I not only contributed but also learned something. I hope to share as much of what I learned as possible.
Before the meeting progressed very far, Ruby Brabo nominated and the Board voted and approved Renee Parker as the citizen representative on the Committee for the At-Large district.
The first thing Dr. Young, our County Administrator, did was give a State of the County presentation. As he does at a regular Board meeting, he read from his notes and gave a solid presentation. But unlike at Board meetings, several of us interrupted him at various points to ask questions, to raise concerns, or to make statements.
Breaking into a few of the key takeaways from his presentation, it was interesting to note that the metrics he listed for 2017 included four capital projects. Of those, three of them (Route 3/301 water extension, High School track, and a new fire engine) were cash funded and incurred no new debt to the County. Only the Middle School expansion added to the County's debt (roughly $20 million). I'll get more into the debt situation in a minute.
Dr. Young then explained how the County's credit rating was obtained. It wasn't strictly finances as I had assumed but instead looked at the County as a whole. Yes, finances were part of the math, but the credit agencies also looked at the stability of the County. In other words, things like the leadership, employees, cooperative relationships with other entities, etc. The overall theme though was "develop or die." The best analogy I could walk away with was something my parents always told me when I was growing up as a teenager. While they wanted me to go to college, even expected me to go, they would be okay if I didn't. But if I wasn't in school, I had to be working a job. I had to contribute to the family in some way, either financially or by bettering myself. Very similar to what I mean by "develop or die" in that the credit agencies expect the County to grow or make improvements in some form or fashion. And when that doesn't happen, lower credit ratings happen.
Getting into the financial aspect of the presentation, the key word was debt. Young looked at comparable Counties both in our region and of a similar size and found that despite how bad our debt may seem, it's not as bad as many people think. As he summarized at the end, he said our "house is not on fire" and that the debt was manageable but cautioned that our "appetite for capital projects is insatiable." In other words, there is hope of getting out of debt. But just like paying off that credit card debt or home mortgage, there are trade-offs and costs associated with that.
Comparing the County debt to my home mortgage was the best way I could think of to make sense of it all. Most, if not all, mortgages have a principal portion and an interest portion of the payment. In other words, for every $100 you pay on your house payment every month, $80 goes to pay off interest and only $20 pays off the principal. The same thing with the County debt, except the numbers are much larger. So while we have about $80 million in debt, we have $33 million in interest. And just like a home loan, we can pay down on the principal to reduce the interest, therefore reducing our overall debt. One shocking tidbit of information was that if we did not use our landfill income to fund our projects, we would need to raise our tax rate 23 cents to cover costs. That goes back to support his comment about that insatiable appetite for capital projects.
As he progressed into his presentation, my education level about County finances increased ten-fold. Sure, I knew some of the County expenses were mandated by Federal or State law, but some payments are also mandated by previous agreements or contracts. But things got interesting when he began talking about income. First, I learned that the Capital Fund and the General Fund could not be combined or cross-pollinated. In other words, they aren't allowed to play with each other. But the landfill income portion of the presentation was what scared me the most.
Currently, the landfill has a lifespan of another 29 years. That's 29 more years of income the County can expect to get. Except 20 years of that income is already spent or allocated to be spent. In other words, we've already borrowed against two-thirds of that income. Not at all ideal. Especially when you consider that because the landfill income is funding the Capital Fund, we're looking at a dim view of capital improvements in 30 years. Unless we look at other sources of income before that well runs dry.
Which ties back to the debt and paying off the principal early. If we can manage to pay down the debt early, then we can use the landfill revenue early. Or save it for a rainy day. But it gives us more opportunities to be fiscally and financially stable going forward.
The hardest pill to swallow though was one of the options to paying down that debt early. As I said at the start, it'll cost us as citizens. And one of those costs may be no equalization. While many developers will tout our low real estate tax rates as a way to attract home buyers, it means lower income for the County coffers. While many citizens will tout our history of equalizing tax rates based on assessments, it's not necessarily true for the last decade. Although, admittedly, the last decade has been rather hard on real estate values in general. But if the County didn't equalize rates this year, it would mean higher mortgage bills for residents. It would mean, however, more debt principal being paid off for the County.
Now before anyone goes ballistic about increased bills, be patient. Remember, this was just a presentation and a discussion. Nothing is set in stone. It's just an option on the table. And as I learned, the County is required to hold a Public Hearing if their income is more than one percent over their projected amount. In other words, something like this (meaning no equalization) would require a Public Hearing. So residents can voice their opinion for or against that option. Currently, our tax rate is $0.70 cents per $100. If the County equalized, it would drop to $0.67 cents. But just like raising rates, a Public Hearing would need to be held and the County would need to hear from residents on what that extra money is spent on. This was wildly educational for me as I always just assumed the County needed my permission, as a resident, to increase rates. I never knew it worked the other way too.
Transportation was another key discussion topic and Dr. Young said we were in what he called the "eye of the traffic congestion hurricane." In other words, that Route 301 corridor is forecast to have twice the amount of traffic in the coming decade and there are few, if any, plans to maintain or improve the road. So even though the Board of Supervisors is exploring the option of creating a Regional Transit Authority (RTA), as the home of a major thoroughfare, we need to plan for the future.
And that was probably the most important takeaway from the presentation. Future planning. It was again emphasized in discussing County Staff needs, capital improvement priorities, and potential future projects. I think most residents can agree that our County needs certain things such as a well staffed fire department but there are other needs that may be a little more obscure like a new accounting software system.
Wilma Ward, Director of the Finance Department, then gave her presentation on the County Budget. It was a fairly straight-forward overview of how each department completes a line-item budget and submits it to the County Administrator for review. From there, the Board of Supervisors reviews it before everything gets approved. As with any budget this complex, there are certain variables and changes that need to be made throughout the year as well as during the budget creation. The best example I know of is actually the School's budget. They may have a pretty solid guess on how many students will attend every year, but they don't know how many kids will move into or out of the district during the school year. And because their budget is partially based on their Average Daily Membership (ADM), it's hard to set certain amounts in stone for the entire year. The County is the same way. This is also true for income, largely from the State and Federal governments as their respective budgets are not finalized yet. In simple terms, we can't finalize our numbers until we get their numbers. And even when we do get their numbers, they may change them during the year thus requiring us to change ours.
Ryan Gandy, Director of Economic Development and Tourism, gave his presentation next. It was largely focused on reviewing feedback from County leadership, staff, and citizens in an effort to develop a vision for the future. Again, future planning was the cornerstone of the night. By reviewing his SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), the goal was to create a Vision Statement.
It was important to differentiate the Vision Statement from the Mission Statement as they are technically two different things. Personally, I've never seen much of a difference between them and have found common sense to be a much better mission in life. But over the years I've found that common sense doesn't always work and isn't very finite. So like civil, criminal, and tax law, there needs to be a concrete measuring stick to use. The current Mission Statement reads:
From 2018-2023, King George County will maintain a comprehensive economic development program that encourages controlled development and diverse revenue streams in order to manage our inevitable growth while preserving the historical, cultural, and rural character of our community.
While it may look like a boiler-plate mission, there are some key focal points that stood out to me like "diverse revenue streams" and "inevitable growth" and "controlled development."
One last thing I noticed during the meeting was that the mood was cooperative. While there were disagreements, I wouldn't say they were heated or disrespectful. They were simple discussions about complex topics where there were many sides to be seen. And as with any meeting dealing with complex issues, there's bound to be a difference of opinion. But the fact that everyone at the table was willing to listen and given the opportunity to voice their own opinion in turn gave me hope for our future work sessions.
In conclusion, or the tl/dr if you prefer, the meeting was productive and educational. Our debt is large but there are solutions. There are a lot of myths to be dispelled about our County's Budget. Future planning and a forward-thinking vision is key to our County's survival.
Meeting Attendees:
Jeff Bueche (Board of Supervisors)
Richard Granger (Chairman, Board of Supervisors)
Ruby Brabo (Board of Supervisors)
Cathy Binder (Board of Supervisors)
Neiman Young (County Administrator)
Wilma Ward (Director, Finance Department)
Neil Richard (Citizen)
Sherry Allwine (Citizen)
Renee Parker (Citizen)
Keith Conner (Citizen)
Ryan Gandy (Director, Economic Development and Tourism)
*Others were present at the table but I did not catch their names.
*Other County officials and members of the public were also present in the audience.
*Others were present at the table but I did not catch their names.
*Other County officials and members of the public were also present in the audience.
No comments:
Post a Comment