Welcome Visitor
Sat, Jul 11, 2020
115 members
Breaking News
Town of Nashville
Braswell Memorial Library
Harold D. Cooley Library
Nash Arts
Nash County
Nashville Chamber of Commerce
Nash Community College
Nash County Relay for Life
Nash-Rocky Mount Schools
N.C. Wesleyan College
Rocky Mount Area Chamber
Rocky Mount Children's Museum
Rocky Mount Travel & Tourism
Boys & Girls Club of Nash/Edgecombe Counties
State of N.C.
The Dunn Center for Performing Arts
Town of Castalia
Nash board reviews county’s financial health

Nash County’s financial officer, Lynne Hobbs, opened Nash County’s board of commissioners’ annual retreat last month with an overview of the county’s finances, including a mid-year budget report, projections for next fiscal year, and capital improvement projections.

Hobbs, who has been the county’s financial officer for 18 years, thanked the county commissioners for all they have done to “keep Nash County a very sound financial organization.”

Revenues through Dec. 31, 2012 total $49.3 million, Hobbs reported, with a projected final total at the end of the fiscal year this June at $85.8 million. Expenditures total $42 million as of Dec. 31, with a projected final fiscal year total of $85.5 million. This would leave a projected excess of $249,000 at the end of this fiscal year, she said.

“This year,” said county manager Bob Murphy, “we were looking at a projected negative figure in revenue. We’re very pleased to see a small uptick in revenue. Over the years, it has been fairly erratic, but now we may be seeing a trend with an uptick in it. Long term, we have lost significant retailers in the area, and that will have an effect on sales tax.”

“Looking as long term as we can look,” he added, “I don’t see anything dramatic happening with revenue. Even in ‘good times,’ we added only about two to three percent. We’ve not been a high-growth county. I don’t think we’ll magically become one.”

“I’d like to commend you all for the excellent job,” said Fred Belfield, Chairman of the Board of Commissioners. “Compared to surrounding counties, we’re in good shape. I hope the economic situation will move forward and is on the rise.”   

Murphy said there was a small increase in sales tax and some growth in property taxes. Nash County employed 678 people last fiscal year with a population of 96,215, according to the last census in 2010. Property tax revenues totaled $45.6 million last fiscal year, Hobbs’ report states.

The county’s available fund balance as a percentage of the general expenditures has been between 23.7 percent and 26.9 percent over the past four years, Hobbs reported. The state treasurer’s office lists the average across the state as 26.3 percent for counties the size of Nash (50,000 to 99,999). Nash County’s minimum fund balance available is set at 15 percent of the general fund expenditures, according to board policy.

Hobbs explained that fund balance available describes the amount of funds local governments legally have available at the end of the fiscal year to be used in the next fiscal year.  “It is essential that…municipalities and counties maintain an adequate amount of fund balance available to meet their cash flow needs, a state treasurer’s memo states,” Hobbs shared.

The minimum level of fund balance available that should be on hand to meet current obligations and prevent cash flow difficulties is eight percent of the general fund’s expenditures, the memo states. Historically, most of the state’s counties have maintained a total well above this minimum, as a cushion for unexpected expenditures, emergencies, or declines in revenue, the memo explains. Across the state, the average fund balance of about 23 percent “has been consistent throughout the recent economic downturn,” the memo states.

“We want our budget to always be balanced, to be in the black by the end of the year in operational expenses,” Murphy shared. “For the bond rating agency, one of the first questions they ask is about fund balance. It is an important indicator for them as to how the county is doing financially.”

Nash County’s policy for debt is that it must be less than two percent of the tax base. The debt ratio at the end of last fiscal year was at .68 percent, as outstanding debt totals $46.2 million with a tax base of $6.81 billion. Projected debt ratio at the end of this fiscal year is .64 percent, with outstanding debt at $43.5 million and a tax base of $6.8 billion.

Nash County’s policy for debt service is that it must be less than 12 percent of expenditures. At the end of last fiscal year, the debt service was at 5.6 percent. The debt service totaled $4.8 million, and total expenditures were $85.3 million. Projected debt service percentage at the end of this fiscal year is 5.7 percent, with a debt service total of $4.9 million and total expenditures at $85.5 million.

“The board’s policy on debt has been that we’re not going to take on any more that would bring a tax increase,” Murphy said. “Our new revenue goes into the debt service.”

“We don’t have any debt capacity,” he said. “We’re an extremely low-debt county. When we look at debt to total value, we have lots. But our issue is our ability to service debt, to pay it. There is no extra revenue.”

The county’s capital projects for 2014-17 include county and education projects, Hobbs shared with the commissioners.  The county projects are public buildings — additional law enforcement and courtroom space, senior center expansion, and health department relocation — estimated to cost $19.5 million.

Education projects include needs of both Nash-Rocky Mount Schools (NRMS) and Nash Community College (NCC), which total $31.6 million. On the list for NRMS are renovations and additions at the new middle school and at Swift Creek Elementary, Cedar Grove Elementary, Early College High, W. L. Greene Alternative, and Red Oak Elementary schools. Projects for NCC include work on the continuing education and public services facility, renovating vacated space, and land acquisitions.

Hobbs concluded her report by giving an explanation of the county’s net assets as reported in the 2012 Citizen’s Financial Report, which can be viewed online at http://www.co.nash.nc.us/archives/42/2011-12_RN389.pdf. As reported at the commissioners’ regular meeting last month, the report shows the county with a decline in net assets.

“The reason our net assets declined was we are required to report the debt proceeds from the Limited Obligation Bond (LOB) — restricted cash and cash equivalents — shown in fiscal year 2011,” Hobbs explained, “but we cannot record school construction as a capital asset.  So our restricted cash in 2011 includes the proceeds of the borrowing used to build the four LOB projects, but we cannot record the corresponding assets (Rocky Mount High and Southern Nash Field House) on our books. They are recorded in the school system’s financial statements.”

“We hold title to the school properties only for the purpose of satisfying the lenders in the case of default on the debt,” she continued. “The properties are not considered county-owned for financial statement purposes as the title reverts to the schools when the debt is paid off.”

In more detail, “Nash County, as all governments, must now report financial information on the same basis as the private sector,” Hobbs explained. “This basis according to the Governmental Accounting Standards Boar Statement 34 (GASB 34) is accrual based economic resources as is shown on a statement of net assets. Primarily this was done so that governmental information that previously was reported among various funds and on different accounting bases would be presented uniformly with what businesses show in their financial statements.”

“Although this presentation does give a financial picture comparable to private businesses, it presents some unique situations for governments,” she said, “and Nash County is no exception. For instance, GASB 34 requires that we report capital assets net of related debt. As a government entity, we don’t own school buildings, yet we provide debt to construct them. So in essence, we have to report the debt because it is ours, yet there is no offsetting capital asset.”

“When looking at our statement of net assets comparison for fiscal years 2011 and 2012,” she continued, “there was over a $13 million decline in net assets. Net assets are the difference between total assets and total liabilities. The decline was in total assets. Specifically, the decrease was in restricted cash and cash equivalents, which, in 2011, included the borrowed proceeds of debt for the construction projects financed with LOB. Those proceeds were used for construction in 2011 and on through 2012 such that we no longer had the cash to report, thus showing the dramatic decline in total assets, which then is reflected in overall net assets.”

“Ordinarily,” she said, “a business would have an offsetting capital asset to report. But in our case, since we don’t own Rocky Mount High School or the field house at Southern Nash for financial reporting purposes, two of the projects for which we issued LOB, we don’t have a corresponding increase in capital assets to offset the use of the cash for the construction.”

“The point of this explanation is to show that even though the county’s net assets did see a sharp decline, the county’s overall financial health is in no way at jeopardy since the decline is purely due to the technical reporting requirements of GASB,” she concluded. “If you look at the other reported items in the full statement, such as cash and cash equivalents (not restricted), investments, receivables, et cetera, you can see that overall, the county did not experience any decline in those categories.

Printer-friendly format

Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: