Loudoun supervisors narrowly voted down a motion to increase the county’s annual debt limit at their final business meeting Wednesday.
The motion to raise the county’s self-imposed debt issuance guideline by about 13 percent from $200 million to $225 million failed 4-5, with supervisors Kenneth D. Reid (R-Leesburg), James Bonfils (R-Broad Run), Matthew F. Letourneau (R-Dulles) and Janet S. Clarke (R-Blue Ridge) in support of the motion. Chairman Scott K. York (R-at large), Vice Chairman Ralph M. Buona (R-Ashburn), Suzanne Volpe (R-Algonkian), Geary Higgins (R-Catoctin) and Eugene Delguadio (R-Sterling) voted against increasing the borrowing limit.
The debt issuance guideline is a simplified measure the county government uses internally to manage its debt ratio, and determines how much new debt it can take on in a budget year. Following the guideline has helped the county achieve a AAA bond rating.
The current debt issuance guideline was created in 2006 and has remained unchanged even as the county budget has grown. County staff members and supervisors have considered raising it to help accommodate the surge in infrastructure and capital needs, especially in the public school system.
For next fiscal year, Loudoun schools has requested $257 million from the county—well over the county’s current debt issuance guideline without including the capital improvement projects for the general county government.
Among other plans for the coming year, the Loudoun School Board has said there is a dire need for a Dulles North elementary school, a Dulles South middle school, and a Dulles North high school, as well as funding to design a Dulles South elementary school and high school. The new buildings would relieve the county’s most overcrowded schools.
“If you just think about it logically, the county budget has obviously significantly increased since 2006,” said Letourneau, who made the motion to raise the debt issuance guideline. He noted that it is not directly measured by bond rating agencies and would not impact the county’s ability to keep its rating.
“Raising the amount of money you borrow means that there’s going to be a higher bill to pay for a generation,” objected Delguadio, prompting a rare moment of accord with Buona.
“It took four years to happen, but I’m finally going to vote with Mr. Delgaudio,” Buona said. “My reason is this: I don’t think it’s the end of the world if we raise the debt limit, but we have to remember if we do this, there’s two other things that come into play.”
Buona noted that the county pays 10 percent cash on capital projects, and more projects means the county has to come up with more cash up front through local taxes. Plus, Buona said, debt service payments increase each year, estimating almost $13 million in annual debt service by 2022.
“I’m not really willing to mortgage what the next board will have to do now,” Buona said.
Volpe complimented county staff members on their impact analysis, which included a simulation of an economic downturn, but worried that it did not consider a major recession like the one that rocked the country, and county tax bases, in 2008.
“As Murphy’s Law would have it, what happens if it’s not a downturn?” Volpe asked. “What happens if it’s a full-blown, heavy recession? We’ve done enough mortgaging of our children and grandchildren’s future in this country. I would like us to try and live within our means.”
York pointed out that $130 million in capital improvements tied up in garage construction for the Silver Line stations could be freed up in as little as two years.
“Let us get through the garages, then we’ll free up some space,” York said.
Supervisors for the increase, however, thought the debate was just a lot of fuss.
“Just because we raise the cap doesn’t mean we have to spend at that limit every year, and we will not,” Bonfils said.
Reid pointed out that the debt issuance guideline could be revisited if it was found to be too high, saying that kind of work is what the board is “here to do.”
“If it’s not working, folks, you can change it next year,” Reid said. “It’s not as if it’s ground in stone. It’s a policy, and again, the debt cap has not been raised since 2006.”
“I think we’re making a mountain out of a molehill,” Letourneau said. “This is just an internal policy,” adding: “This just updates a fiscal policy that should have been updated five or six years ago, and hasn’t been. And one of the reasons it hasn’t been is because we get into discussions like this.”
Contact Renss Greene at email@example.com.