County’s capacity to fund future capital projects has been decreasing

Past decisions on the level of authorized debt, which utilized not only current but also future revenues to make debt service payments, and a slowdown in total revenue growth in the operating budget in recent years, have rapidly shrunk the capacity to issue new debt to support infrastructure projects.

• County’s capacity to issue new General Obligation (GO) bonds, the primary funding source for capital projects, has dropped by more than 20% from an average of $112.9 million between FY11 to FY19, to $89.8 million in FY20.
• Funding capacity in other designated funding sources such as School Surcharge, Road Excise Tax and Transfer Tax has also been largely exhausted; some of these are not even sufficient to pay existing debt.
• With a shrinking capacity to fund capital projects, the County has to balance the needs for maintaining, renovating and repairing existing infrastructure with those for new capital projects.
• Incurring more than adequate level of debt would not only increase the County’s debt burden or long-term liabilities and risk the County’s AAA credit rating, but also result in less funding available for all other services if debt service payments as a share of annual operating budget keeps growing.