Measuring fiscal stress
Q: With the financial struggle Petersburg is going through, how do our counties and town governments fare when it comes to debt and reserve balances?
Legislators in Virginia recently adopted two measures to research and provide aid to local governments that may be experiencing fiscal stress that could one day have an impact on governments in the Heart of Virginia.
The state’s budget, adopted in February, includes two fiscal stress preventative measures to help recognize a fiscal crisis in local government and study different factors that could lead to fiscal stress.
A financial crisis in Petersburg last year that created a $12 million budget gap in the current fiscal year and nearly $19 million in unpaid bills, according to reports from The Richmond Times-Dispatch, may have influenced development of the measures.
The adopted state budget would also allow the governor to channel up to $500,000 from the general fund toward relief efforts for the local government in need, according to the report.
Records obtained from governments in Buckingham, Cumberland, Farmville and Prince Edward show the localities have accrued some debt, and all have year-end and beginning-year fund balances from their respective previous budgets.
Total debt service for Buckingham County in its adopted 2016-17 budget was $3.48 million, including service for its courthouse, elementary and middle school. For the 2015-16 adopted budget, the total debt service was $3.1 million.
In fiscal year 2016-17, Buckingham’s estimated year-end balance before commitments was $6 million and the estimated year-end balance (unassigned fund balance) was $4.2 million. Reserve for contingency for fiscal year 2016-17 was $706,183.
The estimated year-end balance before commitments in the 2015-16 budget was $5.6 million, and the estimated end year balance (unassigned fund balance), was $4.2 million. Reserve for contingency for 2015-16 was $134,784.
Cumberland’s debt services during its 2016-17 fiscal year was $3.8 million. Debt services for Cumberland during its 2015-16 fiscal year was $3.8 million.
Total long-term debt service for town of Farmville in 2016 was $11.2 million for outstanding other bonds and $14.8 million for its water tower bonds and bond refinancing, according to town documents.
This amount is lower than it had been the previous year in 2015, which was $12.2 million for outstanding other bonds and $15.9 million for water tower bonds.
Total transfers and contingencies for Farmville’s general fund in 2015 was approximately $561,215. The total general fund was $2.6 million.
This number increased slightly the following year in 2016, reaching approximately $837,160 with the total general fund being $2.9 million.
Town Manager Gerald Spates said the town has avenues in place to generate revenue and to protect the budget from unexpected expenses.
“We have a lot of avenues we can go to in case we need additional funding,” Spates said.
He also expressed hesitation of the idea of the state’s ability through the new measures to “look over your shoulder,” but agreed that there “should be a system in place where (local governments) could reach the state for assistance.”
For Prince Edward County, total debt service in the 2016-17 budget was $1.2 million. Debt service in 2015-16 was $1 million.