Less than a month after the previous Board of Supervisors narrowly voted down a motion to increase a county debt issuance guideline, the new board has approved the increase.
The county’s self-imposed debt issuance guideline limits the amount of new debt the county can issue in a budget year. It now increases by 13 percent from $200 million—the amount set in 2006—to $225 million.
The debt issuance guideline is one tool the county has used to maintain its triple-A credit rating with all three major credit rating agencies by keeping borrowing from outpacing revenue growth. With a difficult budget picture next year, this guideline will affect the county’s ability to tackle big capital projects—like new schools and roads.
Finance committee chairman Supervisor Matt LeTourneau (R-Dulles) reiterated many of his arguments from the unsuccessful motion last month.
“When the board set this $200 million cap, which is an internal control in 2006, debt issuance was 16 percent of government appropriations, and today it’s down to 9 percent,” Letourneau said. “And so by increasing the debt cap from $200 to $225 million, all we’re really doing is adjusting for the growth that’s happening in the county.”
Vice Chairman Ralph Buona (R-Ashburn), along with Supervisors Geary Higgins (R-Catoctin) and Suzanne Volpe (R-Algonkian), continued their resistance to the idea. Buona and Higgins were concerned that the increase would allow the county to borrow too much in the case of a major recession.
“This also generates cash requirements in the operating budget,” Buona said. “This isn’t just capital. This isn’t just debt.”
Buona explained that the debt issuance guideline, in allowing for more capital spending, also affects the county’s cash requirement on capital projects—the county is required to pay 10 percent cash for those projects. He said it would also create additional debt service costs.
New board members and county senior staff members supported the idea.
“We know there’s going to be additional capital requirements for roads and schools,” Supervisor Ron Meyer (R-Broad Run) said. “Are we going to allow ourselves, like any good business or or any person, to take out a mortgage when the time is right, if we need it? $25 million isn’t a lot of money when we’re talking about capital, but this at least gives us a little bit more flexibility to do that.”
“You don’t want to hamstring yourself by not having it available if it’s needed,” agreed Chairwoman Phyllis Randall (D-At Large).
“If we hit a major recession scenario, then what your debt cap is becomes completely irrelevant anyway,” Letourneau said. “You take a step back, you look at all of your projects in the CIP [Capital Improvement Plan] that aren’t absolutely necessary… and you stop spending. And that’s what the 2007 board did had to do when they hit this scenario.”
The motion passed 6-3. Randall, Letourneau, Meyers, Supervisor Tony Buffington (R-Blue Ridge), Supervisor Kristen Umstattd (D-Leesburg), and Supervisor Koran Saines (D-Sterling) voted aye. Buona, Higgins, and Volpe were opposed.