Big ticket items

 

Goochland is working with the Chickahominy Health District on a vaccine roll out. The shots are in very short supply and are allocated to localities by the state. Even though we’re all tired of hearing it, your patience is requested during this trying time.

Life goes on under Covid restrictions. On Tuesday, January 26, the Goochland Board of Supervisors and School Board held a joint workshop to look at the capital improvement plan (CIP) for the upcoming fiscal year, which begins on July 1. The session was held in the gym at the Central High School Cultural and Educational Complex configured to accommodate social distancing of the group. Kudos to Deputy County Administrator for Operations Derek Stamey and his staff for the set up.

A few years ago, in response to dreadful cash proffer legislation passed by the Virginia General Assembly, Goochland crafted a 25-year capital improvement plan. This included all capital—items whose cost exceeds $50 thousand dollars with a useful life of several years—expenditures anticipated for a quarter century. This plan included everything from new and replacement fire-rescue apparatus to routine upgrades for software and HVAC equipment.

The CIP is revisited during every annual budget cycle and amended as real time conditions warrant. For instance, when the school division saw a need to increase the capacity for the new Goochland Elementary School, the long-term CIP was changed to reflect that increased cost.

As a new circuit courthouse—ours has been in use for almost 200 years—was also included in the same time frame, FY2022, CIP adjustments were made. A courthouse security annex, funded by budget surplus, was completed in 2019 as to keep the current facility in use for a few more years. The county purchased a parcel of land adjoining the courthouse green last in anticipation of the new courthouse although a specific location has not yet been identified.

Looking ahead 25 years required best guess estimates of cost increases for materials and construction as well as the interest rate environment.

County Administrator Kenneth Young presented a list of near-term capital projects. These include major items like the new GES (FY 22) and renovations to the middle school; replacement courthouse (FY24); West Creek fire-rescue station (FY26); and land purchases for future facilities through FY31 for a total of $157 million. Also included were amounts for radio system upgrades and vehicle replacements for the sheriff’s office and school renovations.

Young presented a debt service scenario—a suggestion, nothing written in stone—that included incurring $70 million in debt in FY23 to fund the new GES and courthouse; and $26 million in FY28 to fund the fire-rescue station and GHS renovations. This would require adding $500k to debt service reserve in FY21 and 22 and upping debt service four percent each year. The question is which projects included in the $157 million list will be either removed from the list or pushed to the back of the funding queue.

A partial list of CIP projects

Under the first scenario, the earliest additional new debt could be added would be FY 40. Young pointed out that if Tuckahoe Creek Service District debt is retired, which he said could happen as early as FY23, revenue sharing funds would become available to the county. The initial TCSD financing—if you want a detailed explanation corner District 5 Supervisor Ken Peterson—included a provision that 55 percent of real estate tax revenue generated by the increase in assessed valuation of land in the TCSD after calendar year 2002 would be dedicated to TCSD debt service. When those bonds are paid off—perhaps as early as FY23, thanks to last year’s refinancing of a portion of the debt—that 55 percent will be included in real estate tax revenue, providing additional funds without a tax increase. It would also eliminate the 32-cent ad valorem tax levied on all TCSD property.  Given the amount of growth in the TCSD in recent years, this could be a considerable sum without increasing the tax rate. 

Note the "slide" was in error, the earliest date for retirement of the TCSD debt should have read 2032. Sorry for any confusion.

The county has a debt policy, “the ratio of debt service expenditures to total general fund expenditures should not exceed 12%. Net debt as a percentage of market value of taxable property should not exceed 2.5%.” Debt service is defined as the amount of money required to make payments on the principal and interest on outstanding loans or bonds. Based on that policy $152 million in debt to fund all near term CIP items is not affordable, contended Young.

School superintendent Dr. Jeremy Raley observed that the county has “vast” capital needs and that the school division is but a part of the overall conundrum. He presented a chart illustrating capacity and actual enrollment at each county school.

Current school capacity and utilization.

Brick and mortar schools play an important part in the developmental needs of students, Raley said. “Our elementary schools, more than 60 years old, were built for a different time,” he said.  “Schools now need more flex space for learning and outdoor experience.” Alluding to historically low interest rates, Raley said that “money is cheaper than has been for some time.”

In the recent past, the county has funded smaller capital projects with annual budget surpluses. Going forward, if more debt is incurred, those surpluses may shrink. Young pointed out that the West Creek Fire-Rescue station, for instance, would add 15 new county employees, which would increase operating expenses and reduce the opportunity for budget surpluses.

There are many pieces to the CIP puzzle. Prioritizing these projects within the framework of affordability will be a delicate task.

Broadband expansion was not included in the CIP even though all participants at the meeting indicated it is of utmost importance to support virtual learning for our students, people working from home, and business opportunities throughout Goochland.

Raley reported that 600 Kajeet hotspots were distributed by the school division to students with no broadband access, and there some places where they do not work.

District 4 Supervisor Don Sharpe said that expanding broadband access to the entire county—there are unserved areas in all parts of Goochland—is critical to those who work from home or operate a business here.  Sharpe said he would support a tax increase —perhaps with a sunset clause to go away after build- out—to install last mile broadband infrastructure. He contended that Goochland has not been successful in winning grants, which are highly competitive, for this. “You can’t do it (expand broadband) without fiber in the ground,” said Sharpe. Goochland, he said, must do this sooner rather than later.

School Board Chair Karen Horn, District 3, suggested that some of the CARES act funds could be used for broadband expansion.  Young said that CARES act money is being used for ongoing expenses that will not go away when the Covid funding does and urged caution about allocating those funds.

During citizen comment former Goochland Treasurer Pamela Johnson urged the elected officials to be fiscally responsible and remember that they have a duty to be very careful when they spend tax dollars. She recalled how the TCSD debt placed the county perilously close to bankruptcy ten years ago.

In 2013, Johnson recalled, the county changed the frequency of personal property tax from once to twice a year. This resulted in a one time “windfall” of $2.6 million, which was supposed to pay for construction of the new Hadensville Company 6 Fire-Rescue station, the first built by the county. The actual cost, due to environmental regulations and cost overruns, was more than $5 million.

Johnson contended that the economy is still fragile and that many people across Goochland are struggling financially. While county treasurer, she set up thousands of payment plans for property owners in every part of Goochland to help them pay their real estate taxes. “There is no magic money tree behind the administration building to pay for everything,” Johnson declared.

She cited the struggles of Fluvanna County, which borrowed heavily to build a very expensive high school a few years back and raised taxes to finance the debt. Johnson exhorted the group to hope for the best but plan for the worst.

Young will present his recommended budget for FY22 on Tuesday, February 16 at 2 p.m.