First FY25 Budget Work Session

Originally Published: December 5, 2023

Capital Improvement Projects Reviewed

The Commissioners reviewed previously approved Capital Improvement Projects (CIP) with funding changes, as well as new projects, during their first budget work session last week. Chief Financial Officer (CFO) Cudmore began by explaining the County’s current total bond authority for financing projects is $125M, with $89M in unsold bonds already assigned for use. There is nearly $36M bond authority available to finance projects from FY25 through FY30, but those projects have a combined total of $149M, leaving a shortfall of $113M. The County will need additional bond authority for future financing purposes.

Addressing changes to the CIP list, Cudmore noted a $40M increase over the approved numbers in the current FY24 budget, another $39M added for the inclusion of FY30 projects, for a total of an additional $79.5M. The Finance Department, Cudmore explained, would scrub the books to identify allocated, but unused funding from completed and under budget projects. Additionally, there are several CIPs where Cudmore’s recommended financing increase is less than the request from the County Department managing the respective CIP, so Commissioners can decide not to approve the full funding request.

The amount of debt taken on by the County to finance projects is limited by policy and law. For example, the County can have up to 1.89% in outstanding debt as a percentage of the total property assessment value. Numbers for FY25 show a $15.2B value in taxable real property, while total county debt is $187M, or 1.20% of the total property assessment value. By FY30, the outstanding debt will have grown to 1.63% of the total property assessment base, moving closer to the 1.89% limit.

Meanwhile, the County has a policy that debt service must be 10% or less of total recurring revenue. Recurring revenue for the County includes property, income, transfer, and excise taxes. Debt service is the amount required to pay the principal and interest on an outstanding debt for a particular period of time. The debt service amount must be payable from the General Fund, made up of the recurring revenues. In FY25, the on-hand debt service amount will be $16.1M, or 5.13% of total revenue. By FY30, those numbers will have grown to $28.3M and 7.57%, respectively.

Digging deeper, CFO Cudmore said the transfer and excise tax incomes are below projections, so future estimates will need to be tempered. According to a past consultant’s report on the Excise Tax, projected revenue was estimated at $3.8M per year. After being in place for three months, the Excise Tax has netted the county $405,550; annualizing to $1.6M, Cudmore recommends using an income estimate of $2M for the Excise Tax. This could change when the 6-month Excise Tax income data is compiled in the new year, as those numbers could provide a better glimpse of future revenue. All told, there is a funding shortfall of $2.877M in county funding needed to support CIP’s in the FY25 budget.

I’ll cover some specific Capital Improvement Projects in a separate post.