FY2021 Adopted Budget

Capital Improvement Program

Introduction

State and Federal Grants are another source of CIP funding. Approximately $116.6 million is projected to be available to fund various projects. Of this, $101.1 million is projected to be forthcoming from the State, most of which is funding for school construction projects. Enterprise fees, generated within the Water & Sewer and Solid Waste enterprise funds, are the primary funding source for projects within these program areas. In addition, general obligation bonds are also issued, with the debt service paid by these enterprise fees. $13.1 million in pay-go and $61.4 million in bonds are allocated in the FY 2021-2026 CIP. In addition to the previously identified revenue sources, a significant resource (as an alternative to raising taxes) available to the County to produce supplemental revenue is the issuance of General Fund general obligation bonds. This revenue source is the equivalent of borrowing future money, at a fixed rate of interest, for the purpose of paying today’s bills. This source of funding is used for capital expenditures that have a long-term useful life and thus the use of the future funds to pay for them is appropriate. The authority for the issuance of general obligation bonds is granted through enactment of legislation by the County Council. In order to establish a safe level of debt, the County commissioned a study, which facilitated the establishment of a Debt Affordability limit. This limit assists in the establishment of sound fiscal management policies for the County, and helps to ensure the maintenance, or possible improvement, of the County’s credit rating. In February 2018, the County’s bond rating was reviewed by Standard and Poor’s, Fitch, and Moody’s Investors Service, Inc., which resulted in sustaining AAA, AAA, Aaa ratings respectively. The Debt Affordability Limits Study recommended the use of Debt Affordability standards, and the following are being used: 9 General Fund G.O. debt service, as a percentage of General Fund revenue, should be limited to 9.0% 9 General Fund debt, as a percent of assessed valuation, should be limited to 2.0% 9 General Fund debt, as a percent of General Fund Revenue, should be limited to 80.0% 9 Total G.O. debt service, as a percent of General Fund Revenue, should be limited to 17.2%

The Debt Affordability model assumes the County’s annual population growth rate of 1.75%, an assessed valuation growth rate between 3.1% and 3.5%, annual revenue growth in General Fund revenues between 3.4% and 6.3%, and an interest rate of 5.00% on new debt. The Debt Affordability model projects a total six-year General Fund debt capacity of $375.6 million for the period FY2021-2026.

Standards

FY 21 87.39

FY 22 51.15

FY 23 52.52

FY 24 56.29

FY 25 59.66

FY 26 55.22

AFFORDABLE DEBT

GF Debt Service/ GF Revenue GF Debt/ Assessed Value GF Debt/ GF Revenue Total Debt Service/ GF Revenue

7.0% 5.6% 7.7% 7.7% 8.0% 8.2%

9.0%

1.1% 1.6% 1.6% 1.6% 1.6% 1.6%

2.0%

80.0%

55.4% 80.0% 80.0% 80.0% 80.0% 80%

12.3% 9.9% 12.6% 11.9% 12.2% 11.9%

17.2%

492