The Goochland Audit and Finance Committee met on October 6.
This body is comprised of three supervisors—Committee Chair Charlie Vaughters, District
4, Board Chair Jonathan Christy, District 1, and Board Vice Chair Tom Winfree,
District 3—County Administrator Dr. Jeremy Raley, Ed. D., and Director of
Finance Denise Sandlin.
Raley gave an update on the annual county audit, conducted
by PBMares (https://www.pbmares.com/)
for FY26, which ended on June 30. Raley
commended Sandlin and her team for their exceptional work preparing for the
preliminary audit in May and continuing that momentum to the final audit. This
included 72 deliverables, each of which was prepared and ready for the outside
auditors on time. Based on preliminary reports, no concerns, weaknesses, or
deficiencies were found. He said that these results prove that upgrades to the
audit and finance team in the past year are working. These efforts included
enhanced communication between the county and PBMares during all phases of the
audit.
Raley thanked department heads, constitutional officers, the
entire finance team, schools, Department of Social Services, department heads, and
everyone who touches county finances for working in concert to achieve these
positive results.
Sandlin and Raley commended Assistant Director of Finance
Kathleen Smith for her diligent hard work in the audit process. Sandlin reported that her department is in regular
contact with PBMares to complete reports, letters, and related documentation
needed to complete the audit, which will be presented to the Board of Supervisors
for approval in December.
In response to citizen skepticism about the need to attract
economic development with a goal of generating 30 percent of tax revenue from
real estate and 70 percent from commercial—it currently is 82/18—Raley
presented a forecast of county revenues and expenses. He cautioned that his
remarks were a forecast, not set in stone but offered a reasonable scenario of
county finances going forward, based on current conditions, which could be
affected by unknowns in the future.
Since 2020 annual county revenue growth has averaged 7.1
percent, during the same period, expenses have grown 7.7 percent. If the trend
continues, it could result in a $44.6 million shortfall by 2036.
Raley said that Goochland is in a strong financial position
but cautioned that unfunded mandates recently handed down by state government,
including parental leave, which will add $100k to next year’s county budget,
and potential unionization, which has been estimated to add more than $2
million to county expenses, poses challenges.
As Goochland grows and changes, citizens have come to expect
a certain level of services for core functions of local government especially
education and public safety. Over time, said Raley, that has resulted in
increases in operational costs to meet those expectations.
Goochland also needs to fund many capital projects in the
next few years, including a career and technical addition to the high school, fire-rescue
stations, and a new courthouse to replace the one that just marked 200 years of
continuous operation. Raley estimated the current cost of these projects,
inflation will undoubtedly rear its ugly head, at $298.3 million in the next
ten years.
These projects have been on the radar screen for some time
and cannot be put off any longer. “They are brick and mortar investments in our
community.” Preliminary work on some of these projects, including engineering
and architecture, has begun and funding decisions will need to be made soon.
Financing the new Goochland Elementary School, which opened
in 2024 and was needed since 1996, was a heavy lift for the county. Our
neighbors, like deep pocketed Henrico, have so many sources of tax revenue,
including from at least 20 data centers, that they can build schools and fire
stations with “decimal dust”.
How to pay for all of this poses a conundrum, Raley
contended. While the 53 cents per $100 assessed valuation tax rate has not
increased since 2008, tax bills have risen in line with assessments. Property
owners in the TCSD, about five percent of county taxpayers, also pay an added
32 cents ad valorem tax. He presented a chart comparing Goochland tax rates
with our neighbors. Excluding the ad valorem tax, Goochland, at 53 cents, is
the lowest in the region.
The impact of economic development projects including the
two Amazon facilities, Eli Lilly, and others will not affect the county’s
bottom line until certificates of occupancy are issued. In the short term, the
county expects to pay off the remaining TCSD debt in 2030, which will not only
end the ad valorem tax, but make the approximately annual $4.7 million in
revenue sharing on land values in the TCSD, which has been used to service that
debt, available to fund general government operations.
Goochland is the smallest county in the nation to have
earned three AAA bond ratings due to its careful fiscal policies, which include
thresholds for managing debt.
Raley said that the county continues to pursue the goal of achieving
a 70/30 ratio of real estate/commercial tax revenue generation, which is
currently 82/18. This will take significant private investment to “move the
needle”.
The discussion—no decisions were made—turned to various ways
to secure funding for these projects after the $46 million remainder of the $96
million bonds—$60 million for schools, $36 million for the courthouse and
public safety—authorized in the 2021 referendum, $50 million of which were
issued in 2022 at a 2.3 percent rate, has been exhausted. Funds generated through
general obligation bond issuance must be spent within eight years of the referendum, November
2029.
Of the remaining $46 million approved for bond issuance, $18.2
million is available for schools and the other $27.8 is available for the “bucket”
of law enforcement, public safety, and courts, explained Raley. Preliminary
cost estimates for Station 7 are a bit over $14 million and the CTE addition, about
$30 million. Raley said that one option, there are others, for financing the
CTE addition would be to use the $18.2 from the bonds and obtain the $9.2
million balance from other sources.
Vaughters put the impact of inflation in perspective by contending
that $18.2 million in 2019 is approximately $24 million in today’s dollars. He advocated
using realistic projections to decide how much to borrow to avoid shortfalls.
There seemed to be general agreement that incurring debt
within the thresholds of the county financial policy using the “triple triple” bond rating to secure the best terms possible
is the most cost-effective way to pay for these projects. There is about a six-month
window between the time that bonds are authorized and issued.
However, there was disagreement about whether to hold a bond
referendum or use other mechanisms administratively available to localities.
There was brief discussion about “price tags” on the projects. Should estimates
be pared to minimum standards to keep costs low or build for the next 60 years
knowing that the costs will never be less?
As a practical matter, it may not be possible to hold a bond
referendum before next November’s general election. Schools expect to put the
CTE addition out to bid in the spring and will need funding before then.
GOMM was one of many people who sat outside for hours on the
cold rainy election day 2021 to encourage voters to approve the bond referendum.
In addition to schools the bonds were to be used to build West Creek
fire-rescue station 7, whose location was chosen in 2019.
Station 7 was “paused” a few years ago in response to a
lawsuit filed by homeowners near the site, which was identified before most of
their homes were built. As there is a shelf life to funds generated by bond
referendums, the county decided to begin construction on Sandy Hook Station 8
using the bond funds. The suit never went forward, but the delay cost the
county several million dollars, and more importantly at least four years of fire-rescue
protection.
The committee will meet next December to further explore the
matter and perhaps present a course of action to the entire board of supervisors.
The meeting is archived with a closed-captioned video and
transcript at https://goochlandcova.portal.civicclerk.com/event/4543/media
