County looks at capital improvement plan
Commissioners discuss unfunded projects
Charles County has many capital improvement projects slated to begin over the next five years, but the key for the Charles County Board of Commissioners is choosing which projects they initiate first and what has to be put on a hold.
The county’s capital improvement budget request for this year is $495.3 million with $263.5 million of that being previously approved projects. However, $231.8 million of those projects are unfunded.
“That’s a lot,” David Eicholtz, the county’s director of Fiscal and Administrative Services, said.
Those costs are spread over a five year period, Eichotlz said, so it all is not funded in one single year. And the good news, he said, is that 53 percent of the approved projects are projects the county can continue to fund.
However, he said, the other 47 percent of the total are projects that the county does not have funding affordability for at this point. The reason the county cannot afford to complete all of the projects at this point, he
said, is because of an 8 percent debt ceiling the county has.
“We developed a strategy very similar to a mortgage payment. When you went to a financial institution, the first thing they would say is ‘What’s your income level? How much can you afford to buy a house?,’” he said. “We established 8 percent of our operating revenue to be dedicated to that ‘mortgage payment.’ From there we back into the amount of debt we can issue to build our house.”
The county’s debt capacity today sits at just about $30 million according to information from the department. But the county has less than $25 million in debt absorbed this year.
However, Eicholtz said, the county’s projections from year to year change. It is hard to pinpoint what the debt cap will be, he said, because it is hard to project the county’s operating budget from year to year.
To project how much future debt the county can take on, he said, the county uses 3 to 4 percent operating increases from year to year. The county’s debt capacity grows over time, he said, which pushes them closer to its debt ceiling and makes it more difficult to fund new projects.
The county’s projections currently allow for $120.9 million in debt service issued over the next five years, Eicholtz said, but the county needs $118 million in debt to fund previously approved projects in that same timespan.
That would leave the county $2.7 million to fund any new projects, Eicholtz said.
Jenifer Ellin, the county’s chief of budget, said in order to fund some of the projects that were not previously approved the county could either use the $2.7 million available to them or begin “swapping out projects.”
Robinson said the county does not want to swap out projects that are currently in progress. It would be helpful, he said, if the commissioners could get a list of projects that are awaiting the beginning of actual construction.
Commissioner Ken Robinson (D) asked if there were any refinancing options available for the county to open up more potential funding. Eicholtz said the county is always looking for refinancing opportunity, but have done “everything we can do” at this point in time.
“I recall at the end of last calendar year, we were going to do that but then the bond markets just tanked,” Robinson said.
The markets have recovered to some degree, Eicholtz said, but not to the degree the county is looking for. However, he said, they will continue to look out for future opportunities to refinance.
Eicholtz said the county may want to take a look at the budget and rework new projects into it while removing others. Projects were not passed over because they were unimportant, he said, but rather the county just could not afford them at the time.
There is still time to work with the capital improvement budget, he said, and there is another budget work session scheduled for next week. The process will not be complete until May, he said.