Saturday, October 11, 2014

Debt Service as Percent of General Government Expenditures - A Dangerous Game

Hi Yupette,

As someone who followed the Arlington County Board's 2015-2024 Capital Improvement Program deliberations over the Summer, I was often struck by the respect paid to the often-cited indicator of Arlington's fiscal health --- Debt Service as Percent of General Government Expenditures. According to County Manager Barbara Donnellan, Director of Management and Finance Michelle Cowan, and other high-level County employees the County's financial managers struggle mightily to keep the Debt Service to General Expenditures ratio around 9%.

However, if one looks at the manner funds are actually appropriated and spent, the Debt Services to General Expenditures ratio is meaningless and will never be allowed to exceed 10% because the County Manager routinely asks for, and the Count Board routinely appropriates, funds from pay-as-you-go General Fund accounts for capital projects, often via the County Board's consent agenda. For example, although the 2015-24 CIP calls for $28.8 million in funding for synthetic playing fields, as often as not synthetic playing fields are funded by paygo via the County Board's consent agenda, not from the sale of park bonds.

It gets worse, because cost overruns from capital projects are also paid from General Funds. And there are few limits on how the County Manager can move General Fund tax revenue around. So what appears to be a stable financial system is anything but stable, except when it comes to indebtedness. Bondholders can't be told they'll be paid when the County gets around to it, as you're told when you ask when your street will be repaved.

Thanks for your blog.

Tom
Westover

36 Comments:

At 11 October, 2014 , Anonymous Anonymous said...

They have a big internal program to impress the New York bond rating firms, including keeping $500 million to $600 million of tax revenue and unexpended bond funds in low-interest reserve accounts.

 
At 11 October, 2014 , Anonymous Anonymous said...

Bondholders are high and dry...taxpayers are underwater.

 
At 11 October, 2014 , Anonymous Anonymous said...

All that to fund extravagant and unnecessary programs, projects, infrastructure made necessary by their New Urbanism Cult they inflict on us.

 
At 12 October, 2014 , Anonymous Anonymous said...

Donellan and Cowan won't sell park bonds when they can use pay as you go tax dollars out of the current budget for capital parks projects.

 
At 12 October, 2014 , Anonymous Anonymous said...

What happens during the next recession? I guess they haven't planned for a recession. They are building the County's service economy based upon residents having huge amounts of disposable income for things like bar crawls and $1800 per month for studio apartments.

 
At 12 October, 2014 , Anonymous Anonymous said...

We're not even being told how many unaccompanied children and adults are being re-settled in Arlington as political refugees and how much that's costing us and will cost us. Was not discussed at all during the 2015-25 CIP process.

 
At 12 October, 2014 , Anonymous Anonymous said...

So they will pay for 'more seats for refugee children to the tune of 300 refugee children per year' from what?

 
At 12 October, 2014 , Anonymous 22205 said...

When does my street get repaved?

 
At 12 October, 2014 , Anonymous Anonymous said...

Photo is correct --- County is underwater except for bondholders.

 
At 12 October, 2014 , Anonymous Anonymous said...

Latest APS CIP data from the School Board meeting last week: 300 more K-12 students than anticipated.

 
At 12 October, 2014 , Anonymous Anonymous said...

Sheeple who buy Arlington AAA bonds are being ripped off, because the County's bond rating isn't really AAA.

 
At 12 October, 2014 , Anonymous Anonymous said...

So, if APS's capacity is already at a crisis level how can the County afford to accept hundreds of refugee children from Central America every year?

 
At 12 October, 2014 , Anonymous Anonymous said...

Watch for the 2016 Budget.

 
At 12 October, 2014 , Anonymous Anonymous said...

Let's all vote for Alan 'Don't Worry - Be Happy' Howze.

 
At 12 October, 2014 , Anonymous Anonymous said...

No Howze I will vote for Howze. No way Howze'.

 
At 12 October, 2014 , Anonymous Anonymous said...

Wait 5 years. When the expensive new school buildings are completed APS will go to the County Board for money for more relocatable classrooms.

 
At 12 October, 2014 , Anonymous Anonymous said...

FYI...County Manager is waiting until after the elections to ask the County Board to fund more $500,000 Pike bus shelters via pay as you go.

 
At 13 October, 2014 , Anonymous Anonymous said...

How much in staff time and money is being expended impressing the New York bond rating firms?

 
At 13 October, 2014 , Anonymous Anonymous said...

Assuming the County accepts 300 refugee children per year for 5 years that's 1500 more K-12 students than anticipated so APS will need 2 new 750-student elementary schools and will have to hire at least 100 more teachers and staff.

 
At 13 October, 2014 , Anonymous Anonymous said...

How much longer can this go on, given the County's bloated economic development bureaucracy is creating low-paying bar and restaurant jobs and firms with highly-paid employees are leaving Arlington when their office leases are up for renewal?

 
At 13 October, 2014 , Anonymous Anonymous said...

For the record: Barbara Donnellan lives in Fairfax County and has worked for the County for more than 30 years and is going to be County Manager for another what, 1, 2, or 3 years?

 
At 13 October, 2014 , Anonymous Anonymous said...

New Urbanism is a cult aka social-economic belief system that has been massively imposed on everyone in the County. The New Urbanists are at the point where they have visceral hatred towards anyone who doesn't go along with their Urbanist agenda. Like other historic "isms" the Urbanists are blind to the consequences of their actions.

 
At 13 October, 2014 , Anonymous Anonymous said...

Can you spell c-r-a-s-h a-n-d b-u-r-n l-o-c-a-l e-c-o-n-o-m-y ?

 
At 13 October, 2014 , Anonymous Anonymous said...

Next 15 years for APS (2014 - 2029) more new expensive boutique school buildings followed by more relocatable classrooms, followed by more boutique school buildings.

 
At 13 October, 2014 , Anonymous Anonymous said...

Arlington accepts 300 refugee children per year, average age 10 years old, for the next 10 years...significant addition to APS's CIP.

 
At 13 October, 2014 , Anonymous Anonymous said...

Who says it's going to come out of the APS CIP? Will most likely be funded from General Fund paygo via an emergency request from APS to the County Board.

 
At 14 October, 2014 , Anonymous Anonymous said...

If you look at the agenda for the County Board meeting on Saturday you will see they are using money from car tax decal fees for stuff like sidewalk improvements.

 
At 14 October, 2014 , Anonymous Anonymous said...

How much do they have in unsold bonds from past bond referenda?

 
At 14 October, 2014 , Anonymous Anonymous said...

Twenty year AAA bonds are yielding 2.5 %

 
At 14 October, 2014 , Anonymous Anonymous said...

Name of the Game is: Let's Make Moody's Happy. Taxpayers? What Taxpayers?

 
At 15 October, 2014 , Anonymous Anonymous said...

School Board and County Board didn't mention the 300 refugee kids Arlington has accepted at last night's joint meeting. School Board Chair repeatedly stated that APS will be short 2500 seats in 10 years no matter what new schools and additions are currently scheduled to be constructed.

 
At 16 October, 2014 , Anonymous Anonymous said...

Yes, how many refugee children has APS agreed to accept and educate over the next 5 years?

 
At 16 October, 2014 , Anonymous Anonymous said...

Thanks to the New Urbanists spiking the Kool Aid they are all drinking APS will have to build a new elementary school at TJ and expand Barcroft and Randolph Elementary Schools.

 
At 16 October, 2014 , Anonymous Anonymous said...

No, they are drinking New Urbanism communion wine.

 
At 16 October, 2014 , Anonymous Anonymous said...

Yes...they are partaking from the Chalice proffered by the Church of New Urbanism. Pastor Gerald J. Fisette officiating. Next scheduled service will be held at 2100 Clarendon Blvd. at 8:30 AM on October 18th.

 
At 16 October, 2014 , Anonymous Anonymous said...

Oh...Pastor Fisette...I feel the Smart Growth Rapture overwhelming my sub-market rate affordable apartment building.

 

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