With the first two meetings of the Citizen Budget Advisory Committee, we focused a lot of our time on where we were financially as a County. With our most recent meeting on February 28, 2018, we focused a lot of our time on actually working on the budget.
We began the meeting with a few updates on questions from previous meetings. During our last meeting we discussed and heard from Outside Agencies and their requests for funding from the County. This was again discussed, briefly, as the Fredericksburg Area Food Bank and Thurman Brisben Homeless Shelter would see some changes to their funding. The Clerk of the Court, Vic Mason, also let Dr. Young know that he needed a Part-Time position to help with an increased work-load. The position would put the Clerk's Office back to the same staffing level as it was in 2010.
This would be a good point to pause and remind readers of two things. First, these are just work sessions. The final decisions won't be made until after public hearings are held. So if you want to voice your opinion, you still have time, be it at the work sessions or at the Board meetings. Second, as a citizen-member of this committee, I have no vote in the final budget. I only have a seat at the table where I can voice my opinion and ask questions. And with five Supervisors and five citizens, there's bound to be a difference of opinion. Thankfully, everything has been very professional and respectful, regardless of who has what opinion.
Now, back to the meeting. We jumped head-first into the briefing from Davenport & Company, the County's financial advisor for the past few decades. Going through the details of the report was a little time consuming. We waded through the history of Davenport, how the County's credit ratings were determined, and the County's fund balance levels. In a nutshell, it all boiled down to similarities that you would see in personal finance.
While it was noted that there were distinct differences between the County's financial world and an individual's financial world, there are still some parallel themes. For example, looking at credit scores, a positive score will allow for better interest rates when borrowing money. A higher fund balance would be like having more money in your savings account. Even in looking at the debt and debt policy, you can see similarities. If you think of the County's debt as a home mortgage, there's principal and interest to pay for a set period of time. The County's debt policy is similar to not being able to borrow more than a set percentage of your income. In other words, the rule of thumb about not spending more than 28% of your income on a mortgage would be similar to the County's policy of not having more than 12% of expenditures be for debt service.
Eventually, we came to Davenport's financial plan. The key terms were "debt reduction" and "debt mitigation." The first being a plan for paying down the County's debt and the second being a fiscal policy of controlling debt going forward. Kind of like paying off that credit card debt and then not going into debt in the future. We were finally deep into the budget process and plans for the future.
With such a positive credit score and solid fund balances, it would be a balancing act to find a sweet spot to take some excess money out (like taking money out of savings) to pay down the debt early. And if tax rates weren't equalized, that would mean a larger chunk of debt gets paid off sooner. To go back to that home mortgage analogy, if you pay off a large portion of your principle now, you'll avoid paying interest in the future. So a proposed $9 million payment in four years would result in a savings of $13 million over the remaining 25 year life of the debt. Simply put, if we take a small hit now in the wallet or pocket book, we'll avoid a larger one in the future.
To top all of that off, this plan assumes that the County doesn't borrow more in the future. And the general impression I got from listening to and watching the Supervisors was none of them wanted to add to that debt amount. "Cash funding" was the catch-phrase of the evening and appeared to be the plan going forward. Like any financial plan, cash funding would of course mean less money to pay down the debt or less money to pay for large capital improvement projects. So taking a large amount of money out of your savings account to pay for that kitchen remodel may be great but it also means you won't be able to pay off all those credit cards just yet.
This is where Davenport suggested a Public Private Partnership (P3) for larger capital projects. As an example, to help fund a new courthouse, the County could invite developers to build retail or residential sites at the same time. Essentially a mutually beneficial partnership where both sides get something out of the deal. This practice is used in many places across the country and the globe but it didn't sound like it was used all too often in Virginia. So looking in this direction may put us in the proverbial driver's seat when it comes to bargaining.
Now that the major portion of the meeting was over, it was time to get into specifics. We got to dig into three specific departments and their respective budgets line by line. Frankly, it was tedious. But it was also educational. As with this whole budgeting process, I've learned a lot about the County's finances as a whole, but this gave me a much deeper insight into what actually makes up specific amounts on the budget.
First to present was Randy Jones, Treasurer. Category by category, he went through his proposed budget and explained why he needed each dollar he asked for. Some categories didn't garner any questions, some drew a lot. While the new Board has routinely shown itself to be pretty conservative with spending, I was a little shocked, yet pleased, when they were willing to fund educational items, such as conferences and training classes, for employees. There was also some discussion about consolidating some of the assets, services, and contracts across departments to reduce waste and build a more forward-looking plan for future budgets. Dr. Young said he was already looking at some things and already moving in this direction.
Mike Muncie, Director of General Properties, was next in the hot seat. He too faced similar questions asking for clarity on certain items in his budget. The only real surprise came with a position that was new for this budget cycle. It was explained that the employee had been hired shortly after the last budget has been approved and the Board quickly moved on once they had clarity. Muncie was able to answer to all of the questions, just as Jones did. Jeff Bueche did pause and comment that he wished more people knew about the County paying for water and sewer just like all of the other Service Authority customers.
Next up was Dr. Neiman Young, County Administrator, who walked through the Administration and the Board of Supervisors budgets. Again, the Supervisors were supportive of continuing education and training for the staff, and pushed Dr. Young to increase those line items if necessary. And to prove they were not exempt from special treatment, the Supervisors took themselves to task on a few items in their own budget, specifically Office Supplies.
After nearly four hours of diligent work, the meeting ended. As expected, I learned a lot. However, I did not expect to spend quite so much time working through so many different topics. Thankfully we all agreed to continue working beyond our planned end time. I truly felt like we were working and making progress, something I have found to be rare in most of the professional meetings I've attended in my career.
As we wrapped up the evening, we unfortunately did not get to the topic of equalization of the tax rates. We did learn that the School Board would be delayed in presenting their budget, pushing our timeline back a little bit. We also managed to schedule our next few meetings though so things should continue on soon enough.
We began the meeting with a few updates on questions from previous meetings. During our last meeting we discussed and heard from Outside Agencies and their requests for funding from the County. This was again discussed, briefly, as the Fredericksburg Area Food Bank and Thurman Brisben Homeless Shelter would see some changes to their funding. The Clerk of the Court, Vic Mason, also let Dr. Young know that he needed a Part-Time position to help with an increased work-load. The position would put the Clerk's Office back to the same staffing level as it was in 2010.
This would be a good point to pause and remind readers of two things. First, these are just work sessions. The final decisions won't be made until after public hearings are held. So if you want to voice your opinion, you still have time, be it at the work sessions or at the Board meetings. Second, as a citizen-member of this committee, I have no vote in the final budget. I only have a seat at the table where I can voice my opinion and ask questions. And with five Supervisors and five citizens, there's bound to be a difference of opinion. Thankfully, everything has been very professional and respectful, regardless of who has what opinion.
Now, back to the meeting. We jumped head-first into the briefing from Davenport & Company, the County's financial advisor for the past few decades. Going through the details of the report was a little time consuming. We waded through the history of Davenport, how the County's credit ratings were determined, and the County's fund balance levels. In a nutshell, it all boiled down to similarities that you would see in personal finance.
While it was noted that there were distinct differences between the County's financial world and an individual's financial world, there are still some parallel themes. For example, looking at credit scores, a positive score will allow for better interest rates when borrowing money. A higher fund balance would be like having more money in your savings account. Even in looking at the debt and debt policy, you can see similarities. If you think of the County's debt as a home mortgage, there's principal and interest to pay for a set period of time. The County's debt policy is similar to not being able to borrow more than a set percentage of your income. In other words, the rule of thumb about not spending more than 28% of your income on a mortgage would be similar to the County's policy of not having more than 12% of expenditures be for debt service.
Eventually, we came to Davenport's financial plan. The key terms were "debt reduction" and "debt mitigation." The first being a plan for paying down the County's debt and the second being a fiscal policy of controlling debt going forward. Kind of like paying off that credit card debt and then not going into debt in the future. We were finally deep into the budget process and plans for the future.
With such a positive credit score and solid fund balances, it would be a balancing act to find a sweet spot to take some excess money out (like taking money out of savings) to pay down the debt early. And if tax rates weren't equalized, that would mean a larger chunk of debt gets paid off sooner. To go back to that home mortgage analogy, if you pay off a large portion of your principle now, you'll avoid paying interest in the future. So a proposed $9 million payment in four years would result in a savings of $13 million over the remaining 25 year life of the debt. Simply put, if we take a small hit now in the wallet or pocket book, we'll avoid a larger one in the future.
To top all of that off, this plan assumes that the County doesn't borrow more in the future. And the general impression I got from listening to and watching the Supervisors was none of them wanted to add to that debt amount. "Cash funding" was the catch-phrase of the evening and appeared to be the plan going forward. Like any financial plan, cash funding would of course mean less money to pay down the debt or less money to pay for large capital improvement projects. So taking a large amount of money out of your savings account to pay for that kitchen remodel may be great but it also means you won't be able to pay off all those credit cards just yet.
This is where Davenport suggested a Public Private Partnership (P3) for larger capital projects. As an example, to help fund a new courthouse, the County could invite developers to build retail or residential sites at the same time. Essentially a mutually beneficial partnership where both sides get something out of the deal. This practice is used in many places across the country and the globe but it didn't sound like it was used all too often in Virginia. So looking in this direction may put us in the proverbial driver's seat when it comes to bargaining.
Now that the major portion of the meeting was over, it was time to get into specifics. We got to dig into three specific departments and their respective budgets line by line. Frankly, it was tedious. But it was also educational. As with this whole budgeting process, I've learned a lot about the County's finances as a whole, but this gave me a much deeper insight into what actually makes up specific amounts on the budget.
First to present was Randy Jones, Treasurer. Category by category, he went through his proposed budget and explained why he needed each dollar he asked for. Some categories didn't garner any questions, some drew a lot. While the new Board has routinely shown itself to be pretty conservative with spending, I was a little shocked, yet pleased, when they were willing to fund educational items, such as conferences and training classes, for employees. There was also some discussion about consolidating some of the assets, services, and contracts across departments to reduce waste and build a more forward-looking plan for future budgets. Dr. Young said he was already looking at some things and already moving in this direction.
Mike Muncie, Director of General Properties, was next in the hot seat. He too faced similar questions asking for clarity on certain items in his budget. The only real surprise came with a position that was new for this budget cycle. It was explained that the employee had been hired shortly after the last budget has been approved and the Board quickly moved on once they had clarity. Muncie was able to answer to all of the questions, just as Jones did. Jeff Bueche did pause and comment that he wished more people knew about the County paying for water and sewer just like all of the other Service Authority customers.
Next up was Dr. Neiman Young, County Administrator, who walked through the Administration and the Board of Supervisors budgets. Again, the Supervisors were supportive of continuing education and training for the staff, and pushed Dr. Young to increase those line items if necessary. And to prove they were not exempt from special treatment, the Supervisors took themselves to task on a few items in their own budget, specifically Office Supplies.
After nearly four hours of diligent work, the meeting ended. As expected, I learned a lot. However, I did not expect to spend quite so much time working through so many different topics. Thankfully we all agreed to continue working beyond our planned end time. I truly felt like we were working and making progress, something I have found to be rare in most of the professional meetings I've attended in my career.
As we wrapped up the evening, we unfortunately did not get to the topic of equalization of the tax rates. We did learn that the School Board would be delayed in presenting their budget, pushing our timeline back a little bit. We also managed to schedule our next few meetings though so things should continue on soon enough.
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