County Financial Situation Review

The Partnership of New Kent 2030 engaged Good Government Ventures, LLC to conduct an analysis of the financial position of New Kent County as presented in various county financial documents, and compare the results with a highly rated and somewhat similarly situated benchmark county. The various public documents reviewed in the course of the analysis included, among other things, Annual Adopted Budgets, Consolidated Annual Financial Reports, Capital Improvements Plans, Capital Impact Models, annual Audit Reports, and related materials.

Below are some of the key findings from the report.

General Observations

New Kent County is in good shape financially, but is not without prospective challenges. The county has a structurally balanced budget and has been generating an operating surplus. General obligation debt has declined while leases and revenue debt have increased. Debt outstanding and debt service expense are both budgeted to increase in 2019. Unassigned reserve fund is capped at 15% of budget, with excesses swept to the capital fund. Unfunded pension liability is an issue, but largely determined by the Commonwealth.

Financial Risks

  • Reliance on residential/agricultural tax base vs. commercial (88/12)
  • Reliance on external funding for majority of school costs (Composite index = .417)
  • Increase in recurring expenses to maintain service level for schools, sheriff and fire/EMS
  • Economic outlook: slowdown inevitable, timing uncertain

Financial Impact of Future Public Facilities Expansion

  • 2019 New elementary school ($28mm), and a new park ($3mm debt)
  • Firehouse coverage (NK has 4 firehouses vs. 6 in benchmark county)
  • Public water/sewer capacity expansion may be required to support long term growth

State, Federal and Regulatory Financial Issues

  • Unfunded pension liability ($26mm), driven by state code (GASB 67/68)
  • Other Post-Employment Benefits (OPEB) capitalized ($6.7mm as of 2018)
  • Operating leases required to be capitalized as of Dec 2019 (GASB 87)
  • Business and Professional License Tax (BPOL): Gross Rev. cut off $50k if pop over 25k
  • Possible future requirement to capitalize tax incentives for economic development