Debt Management
DESCRIPTION
Debt service is an expense to the County for
principal and interest payments on financing
mechanisms, which include: general
obligation bonds, revenue bonds, lease-
purchase arrangements and loans from the
Virginia Department of Education Literary
Loan Fund.
The Constitution of Virginia and the Virginia
Public Finance Act provide the county with
authority to issue general obligation debt
secured solely by the pledge of its full faith
and credit. The issuance of general obligation
bonds must have been approved by public
referendum, unless such bonds are issued to
certain State authorities. In the
Commonwealth of Virginia, there is no
statutory limitation on the amount of general
obligation debt the County may incur. It
should be noted that the County is restricted
by its own policies to borrowing no more than
2.5% of its assessed value of taxable real and
personal property. Debt secured solely by the
revenues generated by the system for which
the bonds were issued may be issued in any
amount without a public referendum.
As of June 30, 2006, the County had bonded
debt outstanding of $175.5 million. Of this
amount, $130.5 million comprises debt backed
by the full faith and credit of the County. The
remainder of the County's debt represents
bonds secured by specified revenue sources
(i.e., revenue bonds and obligations under
capital leases).
The County's commitment to established debt
and financial management policies has
enabled the County to achieve AAA bond
ratings from Fitch Ratings, AA+ from
Standard & Poor's, and Aa1 from Moody's
Investors Services.
DEBT MANAGEMENT
The process of debt funding begins with the
Five-Year Capital Improvements Program
(CIP). The Board of Supervisors is not only
approving which projects are to be funded in
which year, but the Board also approves a
means of financing. The debt service of the
CIP is designed to have minimal impact on the
General Fund balance and not produce wide
fluctuations of annual debt service
requirements.
FY 06
Actual
FY 07
Budget
FY08
Budget
FY 07
to FY 08
FY 09
Plan
Debt Service
Principal
1,185,722
$
1,220,185
$
1,578,504
$
29.4%
1,851,304
$
Interest
408,199
362,208
696,081
92.2%
680,929
Debt Service Reserve
-
-
-
0.0%
97,631
Total Debt Service
1,593,921
$
1,582,393
$
2,274,585
$
43.7%
2,629,864
$
DEBT RATIO POLICIES
In an effort to maintain fiscal restraint and
control, the Board of Supervisors has
established guidelines for each of the
following debt ratios: debt per capita ($1,900
growing by 2% annually beginning FY2008);
debt to assessed value (2.5%); debt service to
general government expenditures (10%); and
debt per capita income ($5,000).The following
182
Debt Management
graphs illustrates the County's actual and projected compliance with the debt policy:
Debt Per Capita
0
500
1,000
1,500
2,000
2,500
03
04
05
06
07
08
09
10 11 12 13 14 15 16 17
Fiscal Year
$
Actual Debt Policy
Debt to Assessed Value
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
03
04
05
06
07
08
09
10 11 12 13 14 15 16 17
Fiscal Year
$
Actual Policy - 2.5%
183
Debt Management
Debt Service to General Expenditures
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
03
04
05
06
07
08
09
10 11 12 13 14 15 16 17
Fiscal Year
$
Actual Policy - <10.0%
Debt per Per Capita Income
0
1,000
2,000
3,000
4,000
5,000
6,000
03
04
05
06
07
08
09
10 11 12 13 14 15 16 17
Fiscal Year
$
Actual Policy - <=$5,000
184
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