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TO CALL THE ORDER THIS MEETING OF[I. CALL TO ORDER]
THE BOARD OF SUPERVISORS FINANCE AND AUDIT COMMITTEE MEETING FOR DECEMBER 5TH, 2023 AT 1:00 PM AND IT LOOKS LIKE WE HAVE A QUORUM.FOR THOSE THAT DON'T KNOW, THERE'S FIVE VOTING MEMBERS ON THIS COMMITTEE.
UH, THREE MEMBERS OF BOARD OF SUPERVISOR, THE COUNTY ADMINISTRATOR, AND THE DIRECTOR OF FINANCE.
AND WHERE PAUL ATTENDANCE AT THE RECORD SHOW.
FIRST ITEM ON THE AGENDA IS APPROVAL OF THE MINUTES FROM AUGUST 1ST, 2023.
[II. APPROVAL OF MINUTES FROM AUGUST 01, 2023]
THEY WERE DISTRIBUTED IN ADVANCE.YOU'VE ALL HAD A CHANCE TO REVIEW THEM.
ARE THERE ANY ADDITIONS, DELETIONS, OR CORRECTIONS FOR THE MINUTES? SEEING NONE, I'LL ENTERTAIN A MOTION TO APPROVE.
ALL IN FAVOR SIGNIFY BY SAYING AYE A.
[III. PRESENTATION OF THE FISCAL YEAR 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT BY THE COUNTY’S EXTERNAL AUDITORS, PBMARES]
AGENDA IS A PRESENTATION OF THE FISCAL YEAR 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT BY THE COUNTY'S EXTERNAL FUNDERS, MAYORS.AND, UH, HOLLY, DID YOU WANT TO INTRODUCE OUR GUESTS OR JUST TOSS IT STRAIGHT OVER? UM, I'LL TOSS IT STRAIGHT OVER.
HE'S GOT A LOVELY PRESENTATION FOR US THAT'LL TELL HIM, TELL US EVERYTHING WE NEED TO KNOW.
WELL, IT'S FUNNY BECAUSE PEOPLE WOULD GET INTRODUCED AND THEY SAY THEIR NAME AND THEN THEY STEP UP AND THEY'VE GOT THEIR PRESENTATION READY.
WHAT DO THEY DO? I'M MIKE GARBER WITH P MAYOR AND THEY CAN'T GET PAST THE FACT THAT SOMEBODY'S ALREADY INTRODUCED THEM.
THEY STILL HAVE TO SAY, I ALWAYS FIND THAT INTERESTING.
BUT ANYWAY, THANK YOU FOR THAT AGAIN.
YEAH,
UM, SO YEAH, JUST A, JUST A FEW, UH, ITEMS TO GO OVER AND, AND I WAS TELLING CARLA I ACTUALLY DON'T LIKE DOING THE SCREEN PRESENTATIONS 'CAUSE EVERYBODY JUST STARES AT THAT INSTEAD OF LISTENING.
SO I'LL PROBABLY GONNA GO BACK TO THE HANDOUTS IF I CAN NEXT TIME.
SAVE SOME TREES, UM, THAT WAY, BUT THEN IT HAS ME TALKING THIS WAY AND YOU'RE BEHIND ME AND I DON'T LIKE THAT EITHER.
BUT ANYWAY, WE WILL GO THROUGH THIS.
SO WE HAVE ISSUED, UM, THE FINANCIAL STATEMENTS.
WE HAVE, UM, UNMODIFIED OPINIONS ON THE FINANCIAL STATEMENTS.
SO WE ALWAYS START TO THAT WONDERFUL NEWS, UM, AND THE SCHOOL BOARD AND THE EDA AND ALL THAT GOOD STUFF.
SO THAT'S WHAT YOU'RE LOOKING FOR, UM, UNQUALIFIED OPINION.
BUT YOU GUYS ARE QUALIFIED WITH THIS.
WELL, WE'VE CHANGED THAT TO UNMODIFIED THESE DAYS.
'CAUSE PEOPLE WERE TO GO, YOU'RE QUALIFIED TO GIVE AN UNQUALIFIED OPINION.
UM, SO I AM MODIFIED TO GIVE AN UNMODIFIED OPINION.
UH, WE ALSO WOULD LIKE TO REPORT THAT WE HAD NO INTERNAL CONTROL FINDINGS, UM, OR COMPLIANCE ISSUES.
UM, WE ALSO ISSUED AN UNMODIFIED REPORT ON THE FEDERAL AWARDS AS WELL.
UM, AND I KNOW WE ALL REMEMBER, UH, WHEN WE FIRST STARTED THE AUDIT, WE DID NOT ISSUE UNMODIFIED REPORTS ON THE FEDERAL AWARDS, BUT WE HAVE NOW FOR SEVERAL YEARS.
WE'VE BEEN ABLE TO CLEAN ALL OF THAT, THOSE ITEMS UP THERE.
UM, AND I THINK IT'S ALWAYS IMPORTANT TO, TO REPORT THAT WHEN WE PLAN OUR AUDIT WAY, WAY, WAY BACK LONG TIME AGO.
AND THEN WHEN WE GO TO EXECUTE OUR AUDIT PLAN, NOTHING AROSE THAT MADE US GO BACK AND CHANGE OUR PLAN.
WE DIDN'T FIND ANY ISSUES, FOUND NO FRAUD.
WE FOUND NO ABUSE, THINGS OF THAT NATURE.
UM, OR LACK OF CONTROLS THAT WOULD CAUSE US TO GO BACK AND CHANGE OUR AUDIT PLAN BECAUSE I THINK THAT ARE, UM, IMPORTANT THINGS.
OF COURSE, ALONG WITH THIS FINANCIAL DOCUMENT, THERE ARE NUMEROUS OTHER ITEMS THAT WE ACTUALLY WORK ON AND ISSUE SOME TYPE OF OPINION.
THESE ARE AGREED UPON PROCEDURES IN THE SHERIFF'S OFFICE, TRANSMITTAL FORMS THAT GO TO THE STATE, THE EXAMINATION THAT GOES TO BRS, UM, LANDFILL CERTIFICATION.
AND THEN LASTLY, THE DATA COLLECTION FORM THAT WE'LL FINISH UP, UM, HERE IN THE NEXT WEEK OR TWO THAT GOES INTO THE DATA COLLECTION, UH, PROCESSING CENTER FOR THE FEDERAL DOLLAR.
SO ALL OF THOSE THINGS, UM, WERE ALSO COMPLETE OR WILL BE COMPLETED ON TIME FOR OUR AUDIT.
UM, JUST SOME OTHER ITEMS THAT, THAT WE LIKE TO POINT OUT.
UM, THERE ARE ESTIMATES IN YOUR FINANCIAL STATEMENTS.
UM, THERE ARE OTHERS THAT WE RELY ON FOR THOSE ESTIMATES.
UM, CERTAINLY THE RETIREMENT AND OPEP PLAN.
THOSE ACTUARIES CALCULATE ALL THOSE NUMBERS AND WE JUST MAKE SURE THEY'RE DISPLAYED AND PRESENTED CORRECTLY IN THE FINANCIALS.
BUT WE HAVE NO INPUT INTO THOSE NUMBERS AT ALL.
SAME WITH YOUR LANDFILL POST CLOSURE.
UM, USUALLY HAVE AN EXPERT THAT HELPS CALCULATE THAT.
AGAIN, WE RELY ON THOSE ENGINEERS AND THOSE EXPERTS TO DO THAT WORK.
UM, CAPITAL ASSETS, DEPRECIATION AMORTIZATION IS USUALLY AN ESTIMATE OF YEARS OF LIFE ALLOWANCE FOR DOUBTFUL ACCOUNTS.
AND OF COURSE, INVESTMENTS IS ONE THAT MOST PEOPLE DON'T THINK OF.
UM, BUT THERE ARE DIFFERENT WAYS TO COME UP WITH MARKET VALUE ON ESTIMATES AND INVESTMENTS, I SHOULD SAY.
UM, SOME PEOPLE TAKE THREE DIFFERENT VALUES AND DO A, AN AS AN AVERAGE.
WE USUALLY JUST PICK ONE AND GO WITH IT.
THEY ALL COME OUT ABOUT THE SAME PLACE.
BUT, BUT, UM, THERE ARE DIFFERENT WAYS TO VALUE INVESTMENTS.
WE DID ADOPT THE NEW ACCOUNTING POLICY
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THIS YEAR, SUBSCRIPTION BASED INFORMATION TECHNOLOGY ARRANGEMENTS.UM, AND IT WAS A HASSLE TO IMPLEMENT.
UM, A LOT OF WORK HAD TO GO INTO THIS FOR ALL OF OUR CLIENTS.
UM, SOME CLIENTS PUT IN AN AWFUL LOT OF WORK AND HAD NO ADJUSTMENTS TO THEIR FINANCIAL STATEMENTS.
SO IT WAS A LITTLE FRUSTRATING TO THEM.
UM, BUT WE DID GET THAT IMPLEMENTED SUCCESSFULLY THIS YEAR.
I THINK IT'S NICE TO REPORT THAT THE NEXT FEW YEARS THERE ARE VERY FEW THINGS TO IMPLEMENT, WHICH IS KIND OF NICE.
WE CAN TAKE OUR BREATH FINALLY, UM, FROM NEW STANDARDS THAT, THAT HAVE A LARGE IMPACT ON OUR FINANCIAL STATEMENTS.
AUDIT ADJUSTMENTS PROPOSED BY US.
THERE WERE NONE, UH, WHICH IS GREAT.
AND AUDIT ADJUSTMENTS PROPOSED THAT WERE NOT MADE.
SO WE HAD NOTHING, NOTHING THERE.
SO GOOD CLEAN JOB BY FINANCE AND, AND ALL THEIR STAFF.
UM, BUT WE HAD NO AUDIT ADJUSTMENTS THIS YEAR.
UM, JUST QUICKLY, THE COUPLE PROGRAMS THAT WE DID AUDIT THIS YEAR UNDER THE UNIFORM GUIDANCE AND FEDERAL AUDIT STANDARDS, ONE AT THE SCHOOL BOARD.
UM, AND OF COURSE THE CORONAVIRUS, I THINK WE'RE FINALLY WRAPPING THOSE THINGS UP.
SHOULD BE THE LAST YEAR THAT WE HAVE TO DEAL WITH THOSE MONIES FOR MOST PEOPLE.
SOME PEOPLE ARE CARRYING IT INTO 2025, BUT FOR THE MOST PART, THOSE DOLLARS ARE ABOUT, AND I CAN'T REMEMBER IF Y'ALL HAVE ANY CARRYOVER OR NOT, TO BE HONEST WITH YOU.
WE DO HAVE SOME ARTICLE FUNDS STILL.
UM, JUST SOME OTHER REQUIRED COMMUNICATIONS.
AND I'M NOT GONNA GO THROUGH ALL OF THIS.
I JUST THINK WHAT, WHAT I'M TRYING TO GET OVER HERE AND COMMUNICATE IS JUST THERE'S LOTS OF DIFFERENT STANDARDS THAT WE FOLLOW WHEN WE'RE DOING THE AUDIT.
UM, GOVERNMENT AUDITING STANDARDS, SPECIFICATIONS FROM THE A PA ENRICHMENT, UM, SINGLE AUDIT ACT.
ALL OF THOSE THINGS WE HAVE TO FOLLOW.
UM, COUNTY POLICIES AND AND PRACTICES.
I THINK WHAT'S IMPORTANT TO NOTE THERE, THERE, THERE ARE A LOT OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES AND THINGS THAT THAT COUNTY HAS IN PLACE.
UM, YOU ALL ARE RESPONSIBLE FOR MAKING SURE THOSE ARE WORKING.
BUT IT IS YOUR RESPONSIBILITY TO MAKE SURE THAT THEY'RE IN PLACE AND WORKING.
UM, AND OF COURSE, LIKE I SAID, NO AUDIT ADJUSTMENTS ARE UNCORRECT STATEMENTS.
AGAIN, THE AREAS ON THE LEFT, A LOT OF THE THINGS THAT WE LOOK AT HAVE TO COMMUNICATE.
I THINK THE COMMENTS ON THE RIGHT OR WHAT ARE IMPORTANT HERE, WE DIDN'T HAVE ANY DIFFICULTIES.
UM, THERE WERE NO SIGNIFICANT ISSUES ENCOUNTERED.
ARRANGEMENT LETTER AND THE REPRESENTATION LETTER, A COPY OF ALL OF THAT WILL BE PROVIDED TO YOU ALL.
UM, AND OF COURSE THE VERY LAST ONE'S KIND OF NEW JUST TALKING ABOUT THE ANNUAL COMPREHENSIVE FINANCIAL REPORT.
WHILE WE GO THROUGH THIS THING, FRONT TO BACK PAGE TO PAGE, EVERY WORD AND LETTER, WE'RE NOT REALLY AUDITING EVERY WORD AND LETTER IN THIS DOCUMENT.
THE LETTER OF TRANSMITTAL, WE READ IT, WE MAKE SURE IT'S RIGHT, BUT WE DON'T AUDIT IT.
WE DON'T AUDIT THE MDNA, UM, THE STATISTICAL SECTION IN THE BACK.
WE VERIFY AND WE LOOK AT IT AND WE DON'T AUDIT THOSE TYPES OF DOCUMENTS.
IT'S ONLY THAT FINANCIAL PIECE IN THE MIDDLE.
AND THAT'S REALLY WHAT THAT BOTTOM BULLET IS TALKING ABOUT.
WHAT, WHAT WE REALLY LOOKED AT IN OUR AUDIT OPINION VERSUS WHAT'S JUST EXTRA TO MAKE IT A COMPREHENSIVE FINANCIAL REPORT.
UM, FRAUDED ILLEGAL ACTS ALWAYS JUMPS OUT.
SO I'D BE HAPPY TO REPORT THERE WAS NONE THAT WE FOUND.
UM, I WON'T SAY THERE WAS NONE, BUT THERE WAS NOTHING THAT WE CAME ACROSS AT ALL IN ANY OF OUR PROCEDURES AND THINGS OF THAT NATURE.
UM, AND THE LAST ONE THERE, THE MANAGEMENT LETTER.
UM, I DO THINK WE HAVE SOME SUGGESTIONS AND RECOMMENDATIONS, UM, THAT WILL BE ISSUED IN A SEPARATE MANAGEMENT LETTER FOR YOU ALL FOR YOUR CONSIDERATION.
I WOULD LIKE TO SAY THAT WE HAVE NO REASON TO THINK THERE'D BE FRAUD EITHER.
I ALWAYS ASK THAT QUESTION AT THE START OF THE AUDIT TOO, SO, UM, I I APPRECIATE THAT VERIFICATION AT THE END AS WELL.
THAT MAKES ME LIKE, HOPEFULLY I DIDN'T MISS THEM, BUT YOU NEVER KNOW.
UM, I THINK THAT COVERS VERY HIGH LEVEL OF, OF THE AUDIT.
I AM NOT GOING TO GO THROUGH THE FINANCIALS THEMSELVES.
UM, IT LOOKS LIKE YOU ALL ARE LOOKING AT SOME FIRST QUARTER PROJECTIONS THERE ALREADY.
YOU'RE IN THE MIDDLE OF BUDGET SEASON.
UM, SO GOING BACK AND REHASHING OUR JUNE 30TH YEAR, WE PROBABLY DON'T NEED TO DO, YOU'RE ABOUT TO DO THAT ANYWAY.
BUT WITH THAT, I'M HAPPY TO ANSWER ANY QUESTIONS THAT YOU HAVE, COMMENTS, OBSERVATIONS, CONCERNS FOR ME.
QUESTIONS OR COMMENTS FOR OUR AUDITORS? ALRIGHT, WELL I HAVE A COUPLE OF JUST THOUGHTS.
THIS IS THE, UH, ANNUAL PROCESS AND THIS IS DUE TO THE STATE.
THIS SHOULD BE SUBMITTED ON TIME, SIR.
UM, YOU MENTIONED UNMODIFIED, WHICH MEANS IT ACCURATELY REFLECTS THE FINANCIAL CONDITION OF THE COUNTY, WHICH IS GOOD.
YOU MENTIONED NO MATERIAL FINDINGS THAT TRIGGER A RESTATEMENT OR REISSUE OF THE FINANCIALS, WHICH IS GOOD.
UM, NO MINOR FINDINGS OF ERRORS AND OMISSIONS AND THINGS OF THAT NATURE.
SO HOW DO WE DO BETTER NEXT TIME?
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IMPLEMENT NEW STANDARDS, WHICH TAKE A LOT OF TIME AND EFFORT AND DOING THOSE THINGS AND MAINTAINING WHERE YOU WERE, IT'S PRETTY GOOD.UM, YOU, YOU, YOU'RE A LARGE COUNTY HAVE A LOT OF TRANSACTIONS GOING ON.
UM, IT'S NOT TO SAY THAT WE WON'T FIND THINGS NEXT YEAR 'CAUSE WE HAVE CLIENTS THAT ARE CLEAN, CLEAN AND THEN THEY, THEY HAVE A TRANSITION IN STAFF, THEY LOSE SOME STAFF AND THE NEXT YEAR WE HAVE SEVERAL FINDINGS AND THINGS OF THAT NATURE.
SO IT DOESN'T ALWAYS MEAN THAT IT'LL BE THAT WAY.
UM, BUT I I WOULD SAY KUDOS TO YOUR TEAM.
UM, I KNOW THAT WILL OBVIOUSLY BE THEIR GOAL GOING FORWARD IS TO MAKE SURE THAT THERE'S NO FINDINGS OR SUGGESTIONS.
THEY DID GIVE US A LITTLE HELP WITH OUR LEASE ENTRIES, DEBBIE AND I.
UM, BUT WE, WE'VE GOT SOFTWARE THAT HELPS US WITH IT.
WE STILL HAD A FEW MINOR ADJUSTMENTS AND THEY HAVE ONE OF THEIR AUDITORS ON STAFF.
MICHAEL, THAT WAS VERY HELPFUL FOR US DURING THE AUDIT PROCESS.
FOR, FOR A LOT OF COUNTIES WHEN THEY SEE THE AUDITORS COME AND THEY GO, UHOH, HERE COMES THE AUDITORS IN GOOSE, WE WELCOME YOUR INPUT BECAUSE YOU MAY FIND THINGS THAT ARE BLIND SPOTS FOR US THAT WE DIDN'T KNOW ABOUT, AND AS LONG AS WE FIX THEM BEFORE THE NEXT CYCLE, SURE.
UM, THAT'S THE WAY IT SHOULD WORK TO HELP US IMPROVE.
AND, UH, SO WE DO APPRECIATE THE EFFORTS THAT, THAT YOU GO THROUGH TO MAKE SURE THAT WE'RE CLEAN.
UM, I DON'T KNOW HOW MANY OF YOUR, I MEAN, I KNOW, I KNOW THIS'S YOUR FAVORITE COUNTY, BUT I DON'T KNOW HOW MANY OF THE OTHER COUNTIES HAVE CLEAN AUDITS VERSUS FINDINGS.
IS THIS THE EXCEPTION OR IS THIS THE RULE? OR IS THIS I WILL, I WILL, I WILL ANSWER YOUR QUESTION, BUT I'M GONNA I'M GONNA GIVE A SECOND TO GET TO IT.
UM, NO, WE DON'T, WE WE TYPICALLY DON'T HAVE A LOT OF FINDINGS.
AND I'LL BE HONEST WITH YOU, THE ONE OF THE REASONS WHY IS OUR FIRM DOES NOT CHASE AND GO AFTER EVERY RFP THAT IS ISSUED.
UM, THERE ARE CRITERIA THAT WE HAVE BEFORE WE WILL EVEN PROPOSE ON A NEW GOVERNMENT CLIENT.
AND THE CLIENT IN GENERAL, UM, SIZE HAS SOMETHING TO DO WITH THAT SOPHISTICATION, HOW LONG THEIR STAFF HAVE BEEN THERE, UM, WHO THEIR PRIOR PREDECESSOR AUDIT FIRM IS.
AND, AND SO A LOT OF TIMES THAT LEADS TO US HAVING CLIENTS THAT ARE A LITTLE CLEANER.
THEY HAVE MORE STAFF, THEY HAVE MORE CONTROLS IN PLACE.
SO WE MAY NOT HAVE AS MANY FINDINGS HAVE BEEN.
SO, UM, I, I DO THINK THERE ARE SOME SMALLER LOCALITIES THAT PROBABLY IF WE AUDITED WE WOULD PROBABLY HAVE FINDINGS EVERY YEAR.
THAT'S JUST THE WAY THEY OPERATE.
AND THEY'RE OKAY WITH DON'T HAVE THE FINANCIAL ABILITY TO HAVE CPAS AND AND SIGNIFICANT ACCOUNTS ON STAFF.
UM, AND YOU DIDN'T ARGUE WITH THE FACT THAT WE'RE YOUR FAVORITE COUNTY, BUT, BUT JUST TO PUT IT IN CONTEXT FOR THE REST OF THE FOLKS THAT MAY OR NOT HAVE BEEN HERE.
WHEN I STARTED 12 YEARS AGO, THERE WAS OVER 40 MATERIAL FINDINGS.
AND FOR THE LAST SEVERAL YEARS WE'VE HAD CLEAN AUDITS.
BUT WE WERE A HIGH RISK AUDIT FOR A WHILE.
I GUESS WHEN YOU AUDIT, YOU DO A STATISTICAL SAMPLING.
AND WHEN YOU'RE A HIGHER RISK, YOU DO A BROADER STATISTICAL SAMPLING TO LOOK A LITTLE FURTHER.
BUT WITH A LOW RISK, YOU CAN LIMIT THAT AMOUNT OF STATISTICAL SAMPLING.
IT, IT TAKES A WHILE TO GET OFF THAT HIGH RISK LIST ABOUT THREE YEARS.
UH, IT DOES AND, AND YOU'RE THERE.
BUT WE STILL HAVE HIGH RISK PROGRAMS. YOU AS AN AUDITEE MAY NOT BE HIGH RISK, BUT THERE ARE HIGH RISK PROGRAMS. SO OUR SAMPLING SIZE ACTUALLY IS STILL ABOUT THE SAME.
'CAUSE THOSE PROGRAMS ARE HIGH RISK.
SO WE, AND ACTUALLY SINCE WE STARTED OUR AUDIT HOWEVER MANY YEARS AGO WITH YOU, OUR SAMPLING NUMBERS HAVE ACTUALLY INCREASED AND THEY'RE STILL NOT FINDING ISSUES.
SO WE'VE ACTUALLY INCREASED THE NUMBER OF SAMPLES AND THINGS THAT WE LOOK AT SINCE WE STARTED EIGHT, NINE YEARS AGO, WHATEVER IT WAS.
AND STILL AREN'T FINDING ISSUES.
WELL THANK YOU FOR ALL OF THAT.
UH, ON THE, UH, YOU KNOW, FSS B AND CSS B AND ALL THOSE ACCOUNTING STANDARDS, THE CAPITALIZATION OF OPERATING LEASES IS ALREADY THROUGH THE BOOKS.
AND THEN THE SPIT OF THE NIGHT, THE NEW ONE THIS YEAR HAD TO DO WITH, UM, IT'S KIND OF LIKE LEASES, UM, INTANGIBLES, THINGS OF THAT NATURE THAT WE HAVE.
WE PULLED THOSE LIABILITIES ONTO THE BOOKS AS WELL.
THE NEXT HUGE PROJECT THAT IS COMING IS GASB IS COMPLETELY REWRITING HOW THIS IS DONE.
AND I WAS REALLY HOPING I WOULD BE RETIRED BEFORE THEY
UM, I DON'T THINK I WANNA MAKE IT SO I DON'T KNOW HOW MANY YEARS OUT THAT IS, BUT THEY'RE REDOING THE ENTIRE PRESENTATION OF THIS DOCUMENT.
BUT THEY CLAIM IT'S GONNA MAKE IT SIMPLER.
IS IT MORE THAN FOUR
DO YOU KNOW, WHERE'S THE BEGINNING? I DUNNO.
DEBBIE, DO YOU KNOW OFF THE TOP OF YOUR HEAD WHAT DEBBIE'S HOPING SHE'S RETIRED BEFORE THEY DO WRITE THIS? YES.
I, I AM BUILDING MY RETIREMENT ON THAT
EVERYBODY PUTS IT IN A DIFFERENT PLACE.
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I KNOW WHERE IT IS IN THE ONES THAT WE DRAFT.I KNOW WHERE THAT FOOTNOTE IS THAT TALKS ABOUT, UM, YEAH, ANYWAY, I'LL FIND IT.
I'M GONNA GIVE YOU AN ANSWER, BUT I'LL FAIR ENOUGH.
BUT ANYWAY, I, IT, IT MAY BE IN HERE, BUT IT'S, IT'S MAY ASK ONE GUYS, BE FAST.
HAS THERE BEEN ANY TALK AT ALL ABOUT CAPITALIZING UH, ECONOMIC INCENTIVES? IF YOU FORGIVE 5 MILLION OF TAX REVENUE OR DEFER, IS THERE ANY THOUGHT ABOUT PUTTING THAT IN THE BOOKS AT ALL? YES.
DON'T FLOAT ANYTHING TO THE PUBLIC WORLD THAT CAN BE SENT TO THEM AFTER RETIREMENT, AFTER RETIREMENT 10 YEARS OUT.
ANY OTHER QUESTIONS OR THOUGHTS FOR THE, UH, PD
YOU DO REALLY APPRECIATE YOUR COMING AND YOU'LL BE, UH, PRESENTING TO THE BOARD AT OUR BOARD MEETING.
AND JUST TO CONFIRM, WE DO NOT NEED TO MAKE A MOTION TO ADOPT THIS ANNUAL CONSOLIDATED REPORT.
THIS IS A PRESENTATION ONLY INFORMATION ONLY.
THIS IS ADMINISTRATIVE ACTION WHERE YOU, YOU FILE THIS WITH THE STATE, SO THERE'S NO ACTION REQUIRED BY THIS COMMITTEE OR THE BOARD.
WE DO HAVE TO SUBMIT TO THE STATE A LETTER STATING THAT MIKE PRESENTED THIS FORMALLY TO THE BOARD.
UM, BUT WE'VE ALREADY GOT THAT SIGNED AND READY TO ROLL.
I DON'T KNOW WHAT WOULD HAPPEN, BUT THAT WOULDN'T BE GOOD.
SO
THIS IS REALLY INFORMATION ONLY AND IT'LL BE PRESENTED AGAIN TO THE BROADER BOARD.
AND THERE AGAIN, THE BROADER BOARD WON'T NEED TO TAKE ANY ACTION NECESSARILY.
AND YOU HAVE SEVERAL COPIES THAT YOU'RE NOT GONNA NEED TO CARRY BACK TO YOUR CAR.
THERE'S A COPY HERE FOR EVERYONE.
AND, AND ANYONE ELSE YOU MAY WANT.
AND MR. CHAIR TO UH, EXPOUND UPON THE POINT YOU MADE EARLIER.
UM, IN THE PAST WE HAD TO HAVE CALL MEETINGS FOR THIS IN ORDER TO GET IT INTO THE STATE BY THE STATE'S DEADLINE.
THE STATE HAS CHANGED OUR DEADLINE NOW.
SO THIS IS NOW WITHIN THE CONTEXT OF THE CONFINES OF WHEN WE'RE SUPPOSED TO BE DOING IT.
SO WE DO NOT HAVE TO HAVE A CALLED MEETING ANYMORE TO ACCEPT OUR AUDIT IN ORDER TO GET IT TO THE STATE IN TIME.
AND THANK YOU TO THEM FOR DOING THAT BECAUSE A SPECIAL MEETING AROUND THANKSGIVING WAS NOT A LOT OF FUN.
SO, UH, DECEMBER 15TH, WE'RE BEING ON TIME.
ALRIGHT, WELL THANKS VERY MUCH.
GIMME JUST A MINUTE OR TWO TO WE'LL SEE YOU IN A LITTLE BIT.
UH, FOR THOSE THAT HAVE NOTHING BEEN AROUND THAT LONG, UM, WE'VE HAD THREE DIFFERENT AUDIT FIRMS DURING MY TENURE ON THE BOARD AND IT'S TYPICAL PRACTICE TO ROTATE EVERY SO OFTEN.
UM, LAST GO AROUND, I BELIEVE THE AUDITED OR UH, UM, ROTATED THE PRIMARY INDIVIDUAL ON OUR ACCOUNT.
SO WE GOT A DIFFERENT PARTNER, DIFFERENT SET OF EYES AS OPPOSED TO A DIFFERENT FIRM.
BUT I THINK WE
SO IT MAY OR MAY NOT BE TIME AT SOME POINT IN THE REASONABLY NEAR FUTURE, AT LEAST GO THROUGH THAT PROCESS.
WE WILL BE PUTTING IT OUT FOR BID, UM, JANUARY-ISH, JANUARY, FEBRUARY.
DO YOU WANNA STEAL YOUR FEBRUARY? I WOULD LOVE TO KEEP KEEPING MAYORS, BUT YEAH, WE'VE GOTTA PUT IT OUT FOR BID TO SEE WHAT WE GET BACK.
AND AGAIN, WE COULD END UP IN THE SAME PLACE.
WE'RE A DIFFERENT PLACE, BUT IT'S, IT'S A HEALTHY PROCESS TO GO THROUGH TO GET A NEW SET OF LIVES.
SO IT'S BEEN THREE DIFFERENT FIRMS LOOKING AT OUR BOOKS OVER THE YEARS.
UM, AND SO WE'RE GETTING CLEAN.
UM, BUT IT HAD, OUR BOOKS HAVE BEEN LOOKED AT BY OTHER FIRMS AS WELL.
SO THIS IS A, JUST A, A CONFIRMATION THAT WE'RE ON THE RED TRACK.
[IV. FY2024 1ST QUARTER PROJECTIONS]
ALRIGHT.NEXT ITEM ON THE AGENDA IS THE FISCAL YEAR 2024.
ALRIGHT, THIS IS, AGAIN, IT'S INFORMATION OPEN AND PROBABLY GONNA WALK US THROUGH.
WHILE WE ARE EARLY IN DECEMBER, ALMOST HALFWAY THROUGH THE YEAR, THESE ARE JUST THE FIRST QUARTER PROJECTIONS.
SO THESE ARE NUMBERS, UM, THAT WE'RE THE PREDICTIONS AS OF SEPTEMBER 30TH.
UM, I AM PREDICTING THAT WE BRING IN SLIGHTLY HIGHER AMOUNT OF REAL ESTATE TAXES AS WELL AS INTEREST.
THE REAL ESTATE TAX ESTIMATE IS BASED ON, UM, INFORMATION RECENTLY RECEIVED FROM OUR ASSESSOR'S OFFICE.
IT LOOKS LIKE THE SECOND HALF OF THE BILLING THAT WE'LL COLLECT BEFORE JUNE 30, UM, IS SIGNIFICANTLY HIGHER THAN WHAT WE HAD BUDGETED ON.
UH, WE ALSO KEPT OUR INTEREST RATE OBVIOUSLY HIGHER THAN THE PRIOR YEAR, BUT IT'S, IT WAS STILL ON THE CONSERVATIVE SIDE COMPARED TO WHAT WE'RE SEEING NOW.
SO I THINK WE'RE GONNA BRING IN ABOUT 700,000 HIGHER THAN WHAT WE THOUGHT.
AND UM, I'M HOPING THAT MY ESTIMATE IS CORRECT ON EXPENSES, A LITTLE OVER A MILLION TO BE RETURNED BY DEPARTMENTS AND THAT'S REALLY JUST BASED ON CURRENT YEAR VACANCIES THAT WE KNOW OF, WHICH MAKE UP THE BULK OF THE BUDGET.
UM, AND IS, YOU KNOW, JUST LOOKING AT PRIOR YEARS TRENDS OF UNUSED FUNDS,
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UM, TO HAVE AN OPERATING SURPLUS OF 10.7 MILLION.HOWEVER, OUT OF THAT WE TRANSFER MONEY OUT TO THE CIP FUND AND WE'VE ALREADY CHOSEN TO FUND A, UM, $500,000 TANKER WITH FUND BALANCE.
AND TONIGHT WE'LL BE BRINGING, WHICH I KNEW WHEN I WAS PUTTING THIS TOGETHER, THAT WE'D BE BRINGING A FEW OTHER REQUESTS FOR TO BE FUNDED THROUGH FUND BALANCE.
SO, UM, ALL IN ALL, I'M LOOKING AT A ALMOST FLAT LINE BUDGET, YOU KNOW RIGHT, RIGHT.
WHERE WE WERE PREDICTING A NET CHANGE IN FUND BALANCE OF $200,000, BUT TAXES HAVE NOT YET COME IN.
WE'LL HAVE A MUCH BETTER IDEA LOOKING AT THE END OF DECEMBER.
SO THAT'S WHERE WE'RE NOW WHERE DOES THE, UH, ANNUAL ASSESSMENT STAND AS FAR THE RECESSION WORKERS? UM, NUMBER WISE, THEY STARTED THEIR WORK, BUT THEY HAD, THEY GIVE US A, THEY HAVE PRELIMINARY NUMBERS FOR US, SO THAT'S WHAT MY SECOND HALF COLLECTIONS IS BASED ON.
AND THEY'RE COMING IN ABOUT 7.9% I THINK IT WAS.
BUT THEY HAD A LAST, LAST YEAR AHEAD.
SO IT'S, IT'S, IT'S STILL A STRONG AND POSITIVE.
UM, IT'S LOWER THAN LAST YEAR OR THE YEAR BEFORE, WHICH WE ANTICIPATED EXPECTED, BUT IT'LL BE SLOWING DOWN.
BUT AT THIS POINT IT DOESN'T SHOW ANY SIGN OF A BOTTOM FALLING OUT.
IT'S JUST A MORE GRADUAL DECREASE.
I KNOW THEY'VE BEEN PREDICTING A RECESSION FOR A COUPLE YEARS NOW.
ANYTHING ELSE ON THE FINANCIALS? IT LOOKS LIKE ALL OF OUR TARGETS ARE BEING MET.
AND WE'LL TALK ABOUT THE TARGETS IN THE LATER ON WHEN WE TALK ABOUT THE, UH, THE POLICIES AND WHATNOT.
UM, THE FUND BALANCE THAT WE HAVE NOW IS EARNING THREE DARN 12 TO 5%.
IS THAT RIGHT? YES, THAT'S CORRECT.
SO JUST INFORMATION ONLY HERE.
UM, IF WE SPEND A MILLION ON A FUND BALANCE, THAT WOULD REDUCE OUR BUDGET GOING FORWARD BY ABOUT 50,000 A YEAR EVERY YEAR.
SO FOR EVERY MONEY WE SPEND, IT REDUCES OUR BUDGET GOING FORWARD.
SO DO SOMETHING TO KEEP IN MIND.
'CAUSE THAT INTEREST IS IN THE BUDGET, IT'S NOT OFF BUDGET.
AGAIN, WE'RE IN LINE WITH ALL THE NUMBERS AND THE LIGHTS ARE ON AND THE HEATING AND AIR CONDITIONING WORKS.
SO I GUESS WE'RE PAYING OUR BILLS.
SO ANY QUESTIONS OR THOUGHTS? YES SIR.
I ASK, EXCUSE ME, MY QUICK CLARIFICATION.
SO WHEN YOU SAY WE SAVE THAT MONEY, UM, THAT'S NOT IN OUR BUDGET, IS THAT FROM THE DECREASE IN REVENUES? FROM THE INTEREST? YES.
YEAH, THE REVENUES FROM THE INTEREST ARE IN OUR BUDGET.
SO ANY REDUCTION IN THAT LINE ITEM WOULD REDUCE OUR REVENUES AVAILABLE SPENT.
SO IT WOULD'VE TO BE CORRESPOND THE EXPENSE DECREASES TO OFFSET THAT.
UM, YOU KNOW, THE RESERVES, UM, IT'S REASONABLY EASY TO MAINTAIN YOUR RESERVES 'CAUSE ALL YOU HAVE TO DO IS SPEND EVERYTHING THAT COMES IN.
IT'S MUCH HARDER TO BUILD THE RESERVES 'CAUSE YOU HAVE TO TAKE IN MONEY THAN NOT SPEND IT.
WE'VE GONE, WE'VE DONE THE HEAVY LIFTING AND MANAGED TO BUILD THE RESERVES TO THE POINT WHERE WE DID GET THE AAA CREDIT READY.
AND TO MAINTAIN IT GOING FORWARD, WE WILL HAVE TO ADD THE RESERVES TO THE EXTENT OUR BUDGET GROWS.
SO IF THE BUDGET GROWS BY 8%, WE NEED TO INCREASE THE RESERVES BY 8% TO KEEP THAT SAME RELATIVE SAFETY NET FOR THE COUNTY.
SO THERE WILL BE SOME PRESSURE TO CONTINUE TO BUILD, BUT THE HARD WORK OF GETTING TO WHERE WE ARE TODAY HAS BEEN DONE ON IT.
THE EASY PART AGAIN IS JUST DON'T SPEND ANY MORE THAT COMES IN AND YOU'RE IN GOOD SHAPE.
UM, NOW THE CAPITAL SPENDING PROGRAMS THAT WE'VE DONE EACH YEAR, WE MANAGED TO SPEND THAT OUT AN OPERATING SURPLUS EVERY YEAR.
SO IT'S AVERAGE AROUND SIX, 7 MILLION, 8 MILLION A YEAR.
UM, THAT'S ABOUT OUR SURPLUS EXPAND.
SO IT'S COVERED THE ANNUAL BECAUSE WE DO WANT TO MAINTAIN OUR CAPITAL ASSETS.
THAT'S SOMETHING THAT'S CRITICAL.
SO IF YOU HAVE AN OPERATING SURPLUS SUFFICIENT TO COVER YOUR MAINTENANCE CAPITAL, THEN YOUR EXPANSION CAPITAL IS SOMETHING YOU MIGHT ISSUE BONDS FOR OR BORROW MONEY, BUT, BUT YOUR ANNUAL MAINTENANCE IS COVERED BY THAT, THEN YOU CAN CONTINUE TO MAINTAIN YOUR RESERVES GOING FORWARD, CONTINUE TO GENERATE THAT INTEREST GOING FORWARD AND KEEP MAINTAIN YOUR BUDGET GOING FORWARD.
DOES THAT MAKE ANY SENSE? YEAH.
MM-HMM,
ALRIGHT, WELL, UH, TAKE THAT CHUCKLE AS UH, AS AFFIRMATION THAT WE DOING THE RIGHT THING.
WELL THANK YOU FOR THAT PRESENTATION.
AND WE'VE THE RESERVES, DESPITE PASSING THE LARGEST TAX ACCOUNTS HISTORY THIS PAST YEAR.
WE MAINTAIN RESERVES IN SPITE THAT.
AND AGAIN, WE DON'T NEED TO APPROVE THOSE PROJECTIONS, THEY'RE JUST ACCORDINGLY, UH, PART OF OUR FINANCIAL POLICY IS TO CIRCLE BACK TO THE BOARD ON
[00:25:01]
A QUARTERLY BASIS AND LOOK FORWARD TO HOW WE'RE DOING.AND, UH, SO THAT CHECKS THAT BOX.
[V. APPROVAL OF THE GOOCHLAND COUNTY FINANCIAL MANAGEMENT POLICIES]
IS APPROVAL OF THE GUSO COUNTY FINANCIAL MANAGEMENT POLICIES.UM, I'LL, I'LL LET CARLA WALK US THROUGH IT.
UM, THE POLICIES WE'RE LY IN ADVANCE AND REDLINED AND BLACKLINED AND ALL OF THE GOOD STUFF.
UM, THERE ARE SOME INCREMENTAL CHANGES THAT WE'RE POSING TO THE POLICY.
AND ONCE WE GET DONE, I'LL MOVE TO THIS COMMITTEE TO MOVE TO EITHER RECOMMEND APPROVAL MODIFICATION, DISAPPROVAL TO THE BROADER BOARD, AND THEN WE'LL ASK THE BROADER BOARD TO APPROVE, DISAPPROVE, MODIFY THESE POLICIES AS THEY SEE FIT.
UM, BECAUSE THESE POLICIES WERE ADOPTED BY THE BOARD OF SUPERVISORS AND, AND AS SUCH WE MAKE RECOMMENDATIONS BUT NOT, UH, APPROVE OR DENY.
SO WOULD THAT AS A LITTLE BIT OF BACKDROP PROBABLY.
WOULD YOU LIKE TO WALK US THROUGH SOME OF THE CHANGES? I WILL, YES.
SO WE, WE WENT THROUGH THESE CHANGES IN PRETTY GOOD DETAIL LAST AUDIT FINANCE COMMITTEE MEETING.
UM, SO I'LL REVIEW HIGH LEVEL THESE CHANGES AND THEN POINT OUT ONE ADDITIONAL ONE WE'VE MADE SINCE THEN, WHICH WE'VE TALKED ABOUT, BUT NOW IT'S IN WRITING.
SO THE FIRST CHANGE WAS TO THE OPERATING BUDGET POLICIES.
AND THIS IS THE, THE ADDITIONAL CHANGE THAT WAS ADDED, UM, WHICH IS ON PAGE FOUR.
UH, WE HAD ADDED THE WORD STRUCTURALLY BALANCED BUDGET.
AND THAT'S JUST EMPHASIZING THAT WE DON'T WANNA BALANCE OUR BUDGET WITH NON-OPERATING REVENUE.
SO WE DON'T WANNA COUNT ON DEBT TO BALANCE OUR BUDGET.
UM, WE DON'T WANNA COUNT ON FUND BALANCE.
WE WANNA BRING IN ANNUAL OPERATING REVENUE TO BALANCE OUR ANNUAL OPERATING EXPENSES.
ONE CHANGE THAT WE'VE MADE HERE IN WRITING IS, UM, IN TALKING ABOUT THE STRUCTURALLY BALANCE BUDGET, WE'RE EXCLUDING ANY, SO IT SAYS ANY USE OF FUND BALANCE DEBT ISSUANCE OR TRANSFER TO THE CIP PROGRAM FOR NON MAINTENANCE COSTS.
AND WE'RE ADDING THAT BECAUSE THAT'S AN EXPENSE THAT WHILE WE LOVE TO FUND IT EVERY YEAR AND WE ALWAYS DO, UM, IN A CRISIS, WE COULD CUT THOSE OUT.
THOSE ARE NOT TRULY OPERATING EXPENSES.
SO WE JUST WANTED TO TOUCH ON THAT BECAUSE THAT'S A BIG CHUNK OF OUR ANNUAL EXPENSES OUT OF THE GENERAL FUND.
SO THAT IS OUR, PROBABLY OUR BIGGEST CHANGE TO THESE, UH, OPERATING BUDGET POLICIES.
THE NEXT CHANGE, WHICH WE DISCUSSED LAST MEETING, WAS TO THE CAPITAL IMPROVEMENT POLICIES.
SO JUST FOR EDUCATIONAL PURPOSES, MR. CHAIR, IF I HEARD YOU RIGHT, CARLY, YOU SAID THAT THE BEING OF STRUCTURALLY WOULD NO LONGER INCLUDE INTEREST OR LOANS, THINGS OF THAT NATURE.
IT DOESN'T, IT WON'T INCLUDE BONDS, WON'T COUPON NEW BONDS OR LOANS THAT WE TAKE OUT.
BECAUSE INTEREST WE DO GET EVERY YEAR.
DEBT, WE DON'T BORROW EVERY YEAR, SO WE DON'T WANNA FUND THAT.
THE IDEA OF IMAGINING RECURRING OR RECURRING AND ONE TIME OR ONE TIME.
UM, AND A LOT OF THINGS THAT BROUGHT THIS TO THE FORE, QUITE FRANKLY IN MY EXPERIENCE WAS THAT THE STATE, THE VIRGINIA STATE GOVERNMENT HAS A, A POLICY TO PASS BALLOTS BUDGET EVERY YEAR, BUT IT INCLUDES PROCEEDS AND DEBT ISSUANCE, IT INCLUDES RATING THE RAINY DAY FUND.
IT INCLUDES A LOT OF ONETIME ITEMS. AND THAT'S HOW THEY GOT IN A LITTLE BIT OF TROUBLE.
AND THE CREDIT RATING AGENCIES PUT 'EM ON CREDIT WATCH FOR POSSIBLE DOWNGRADES BECAUSE THEY TOOK THE GRADE A FUND DOWN FROM 1,000,000,002 DOWN TO 200 MILLION, TWO 80 MILLION ACTUALLY.
UM, AND THE TREND WAS USING THOSE ONE-TIME USES TO FUND RECURRING EXPENSES AND THAT'S WHERE THEY THREW THE FLAG.
SO THEY DO NOT HAVE TO HAVE A STRUCTURED BALANCE BUDGET AT STATE LEVEL, BUT THEY JUST CAN USE WHATEVER THEY CAN GET THEIR HANDS ON AND BALANCE IT.
AND WE DON'T THINK THAT'S MAYBE NECESSARILY THE RIGHT WAY TO DO IT.
SO THIS IS A LITTLE DIFFERENT APPROACH, WHICH IS MATCH YOUR RECURRING WITH RECURRING ONE TIME FOR ONE TIME.
AND, UH, ONE OF THE BIGGEST DRIVERS OF THAT IS GOING FROM A HISTORICALLY LONG ZERO INTEREST RATE ENVIRONMENT TO WHERE WE ARE RIGHT NOW.
I MEAN THE INTEREST IS ACTUALLY MEANINGFUL NOW VERSUS WHERE WE WERE FOR 15 YEARS.
I CAN FUND SOMETHING NOW ABOUT 10 YEARS WHEN INTEREST RATES WAS ZERO, CASH WAS TRASH, CASH IS NO LONGER TRASH.
SO THE RESERVES ARE ACTUALLY PROVIDING A MEANINGFUL NUMBER ABOUT 3 MILLION A YEAR TO OUR BUDGET.
AND IF WE SPEND ALL THE RESERVES, WE LOSE 3 MILLION A YEAR GOING FORWARD.
SO IT'S ONE OF THOSE THINGS WHERE IT'S, IT'S NOW IT'S NICE TO HAVE RESERVES.
UM, IT'S ACTUALLY PAYING US MORE THAN WE'RE PAYING ON OUR DEBT IN SOME CASES.
BUT, UM, WELL IT ALSO MAKES FUTURE BORROWINGS LITTLE THAT MUCH MORE SIGNIFICANT.
UH, YOU PROBABLY WANT TO TO TIME THE FUTURE BORROWINGS.
UM, IT WILL WON'T BE AS LUCKY AS WE DID LAST TIME.
IT'S 50 MILLION WE BROUGHT IN AT 1.8 AND 1.9, BUT MAY NOT BE THAT LUCKY.
IT, IT IS SOMETHING TO TAKE INTO CONSIDERATION AS WE CONSIDER THE TIMING OF WHEN YOU GO TO THE MARKET.
BUT THE OTHER MEETING, I THINK IT'S 46 MILLION OF THE, OF
[00:30:01]
THE, UH, BOND.SO THAT'S STRUCTURAL BALANCE, UH, ERIC STRUCTURALLY BALANCE.
THEN, UH, MOVING TO THE NEXT POLICY WITHIN THIS AS THE CAPITAL IMPROVEMENT BUDGET POLICIES, THIS IS REALLY JUST PUTTING WORDS INTO, UM, OUR CURRENT PRACTICE.
UM, THE OLD POLICY IS TO READ, THE COUNTY WILL DEVELOP A FIVE YEAR PLAN FOR CIP AND WE JUST WANTED TO EMPHASIZE THAT WE NEED TO IDENTIFY REVENUE SOURCES FOR THOSE FIVE YEARS OF SPENDING.
SO, UM, NO REAL SIGNIFICANT CHANGES TO HOW WE ARE CURRENTLY OPERATING.
WE JUST WANNA EMPHASIZE THAT WE NEED TO IDENTIFY THE FUNDING.
THIS CIP AS YOU ALL KNOW, WE HAVE A 25 YEAR CIP MM-HMM.
AND PART OF THE REASON FOR THAT IS WE WANT TO KNOW WHAT THE EXPENSES ARE FOR THE REMAINING USEFUL LIFE OF ALL THE COUNTY'S ASSETS.
SOME OF IT STRETCH OUT 20, 30, 40 YEARS.
UM, AND WE WANT TO KNOW IF WE DID A FIVE YEAR PLAN, FOR INSTANCE, IF WE NEED TWO SCHOOLS IN YEAR SIX, WE KIND OF WANT TO KNOW THAT BEFORE YEAR FIVE.
SO WE HAVE A 25 YEAR LAYS OUT ON EXPENSES.
BUT WE INITIALLY TRIED TO BALANCE 25 YEARS WORTH OF EXPENSES AND THAT WAS KIND OF CHASING YOURSELF.
SO WE DECIDED TO BACK OFF OF THAT QUITE A BIT AND SAY, WELL WHAT KIND OF VISIBILITY DO WE HAVE IN THE REVENUES? AND 3, 4, 5 YEARS OUT IT STARTS TO GET PRETTY FUZZY.
SO WE'VE UNDERTAKEN TO AT LEAST HAVE A GENERAL PLAN FOR THE FIVE YEARS RECOGNIZING THAT WE ONLY APPROPRIATE ONE YEAR IN TIME, BUT WE OUGHT TO AT LEAST HAVE SOME THOUGHT ABOUT FOR THE NEXT FIVE ANYWAY.
AND THEN ALSO KNOW WHAT'S COMING OUT FOR THE NEXT 25 SO WE KNOW HOW TO PLAN, UH, FOR THE FUTURE WITHOUT ACTUALLY HAVING TO BIND OURSELVES WITH FINDING HOW WE'RE GONNA PAY FOR 20 YEARS FROM NOW.
SO DOES THAT MAKE ANY SENSE? I MEAN THOSE ARE THE CHANGES THAT WE'RE MAKING HERE THAT ALSO ALLOWS US TO MAKE SURE THAT OUR CIP IS A VALID ONE SO THAT IF WE PUT IN A, A PIE THE SKY PROJECT, THIS $80 MILLION PROJECT, WE CAN'T IDENTIFY A SOURCE OF REVENUE TO PAY FOR IT THAT MAYBE THAT'S NOT A PROJECT WE SHOULD BE TALKING ABOUT.
AND THAT TAKES AWAY PEOPLE FOCUSING AND SAYING, WELL WE'RE GONNA BUILD THIS IN THIS MANY YEARS WHEN WE DON'T SEE ANY WAY WE CAN BUILD THIS.
SO IT IT, IT FORCES US NOT TO HAVE PROJECTS IN THERE THAT WE CAN'T LEGITIMATELY COME UP WITH SOME SENSE OF WHERE WE'RE GONNA PAY FOR IT FROM.
IN ADDITIONALLY, WE HAVE, WE HAVE BETTER, BETTER INFORMATION EACH YEAR 'CAUSE WE HAVE NEW INDICES ON THE MARKET.
I MEAN WE DIDN'T HAVE THE V WHAT 20 YEARS AGO AND YOU KNOW, THINGS THAT WE CAN PULL FROM TO GIVE THE PEOPLE COMFORT IN HOW THE DECISION WAS MADE MADE.
AND THINGS CHANGE MATERIALLY YEAR AFTER YEAR.
BIG PROJECTS COME IN, BIG PROJECT LEAVES.
SO THINGS DO CHANGE EVERY YEAR.
ADDITIONAL THOUGHTS ON THE CIP APPROACH.
OKAY, NEXT, UH, CHANGE THE TOOL CHANGE NEXT CHANGE.
UH, AND THIS WASN'T TOO MATERIAL, BUT WE ADDED AN ADDITIONAL CATEGORY TO OUR FUND BALANCE RESERVE POLICIES.
WE HAD PREVIOUSLY HAD ASSIGNED AN UNASSIGNED FUND BALANCE, BUT WE ALSO WANTED TO ZERO IN ON OUR AVAILABLE FUND BALANCE, WHICH IS THE TWO OF THOSE COMBINED.
UM, BECAUSE WHILE WE CAN ASSIGN AMOUNTS TO PROJECTS THAT WE INTEND TO USE THAT MONEY FOR, IT DOESN'T BIND IT, IT'S NOT A, ANY KIND OF LEGAL OR FORMAL ACTION.
WE'RE JUST ASSIGNING IT THERE WITH THE INTENTION TO USE IT IN THE FUTURE.
SO WE WOULD LIKE TO ALSO LOOK AT THE AVAILABLE FUND BALANCE AND UM, WE CREATED A RANGE TO KEEP THAT WITHIN WHICH OUR RANGE PER THIS NEW POLICY WILL BE BETWEEN 55 AND 65% WITH A TARGET OF 60%.
AND AGAIN, THAT IS JUST MIRRORING, UH, MIRRORING THE RANGE THAT WE'VE BEEN IN FOR THE PAST AT LEAST FIVE YEARS.
UM, SO WE TYPICALLY CARRY THIS AVAILABLE FUND BALANCE AT A GOOD RANGE.
SO WE PUT THAT IN WRITING AND THAT WILL ALSO AFFECT OUR CREDIT RATING.
THAT KEEPS US AT THE AAA CREDIT RATING TO SHOW THAT WE HAVE THESE FUNDS AVAILABLE IF WE NEED TO BORROW AND PAY DEBT WITH THEM OR USE THEM FOR ANYTHING ELSE.
UM, YEAH, JUST, UH, JUST TO FOLLOW ON THAT, UM, AVAILABLE FUND BALANCE IS SOMETHING THE CREDIT AGENCIES LOOK AT.
'CAUSE IF PUSH COMES TO SHOVE AND THERE'S A DIRE EMERGENCY, WHAT FUNDS DO YOU HAVE AVAILABLE AT YOUR DISPOSAL TO ADDRESS THOSE EMERGENCIES? AND CERTAINLY THE UNASSIGNED IS THERE.
UH, THE ASSIGNED IS AVAILABLE FOR REASSIGNMENT AND SO THEY SAY, WHAT ARE YOUR TOTAL RESOURCES YOU HAVE AVAILABLE AT YOUR DISPOSAL THAT CAN BE ASSIGNED OR REASSIGNED OR MOVED AROUND OR WHATEVER YOU NEED TO DO TO ADDRESS EMERGENCY.
AND THAT'S YOUR TRUE WHAT THEY CALL, YOU KNOW, SHOCK ABSORBER AND THE SYSTEM AND WELL, THE ASSIGNED IS ASSIGNED FOR PROJECTS THAT WE KNOW ABOUT.
THEY LIKE TO SEE THAT WE'RE LOOKING AHEAD AND STARTING TO SET ASIDE FUNDS AND EARMARKED FUNDS, UM, TO THE EXTENT YOU, TO YOU, YOU
[00:35:01]
SPENT THOSE DOWN, YOU'RE REDUCING YOUR SHOCK ABSORBENT SYSTEM IF YOU'LL, SO IT'S KIND OF A BALANCING ACT.UH, IN THE PAST WE'VE UH, EARMARK MONIES AND THEN OPERATING SURPLUS HAS BEEN ABLE TO PAY FOR THOSE.
AND SO THAT WE JUST EARMARK IT THE NEXT YEAR AND IT'S KIND OF MAINTAINED OUR POSITION OVER THE LAST SEVERAL YEARS.
UM, THE TARGET RANGE OF 55 TO 65 IS, AND, AND I'VE GOT A COUPLE OF WORDS I MADE WORDSMITH HERE JUST A LITTLE BIT BEFORE WE DO THIS, BUT IT'S GENERALLY THE RANGE THAT THIS COUNTY WAS IN WHEN WE APPEARED BEFORE EACH OF THE THREE CREDIT RATING AGENCIES.
SO ANY DEPARTURE FROM THAT MAY RAISE AN EYEBROW OR TWO.
NOT SAYING WE'D LOSE THE AAA, IT'S JUST, IT'D BE DIFFERENT THAN WHAT THEY SAW BEFORE.
AND WE KNOW WHAT THEY SAW BEFORE THEY SAID THAT'S FINE, THAT GETS YOU THE RATING.
WE DON'T KNOW WHERE THE TRIGGER POINTS ARE BECAUSE THEY LOOK AT A LOT OF DIFFERENT THINGS, NOT JUST THE RESERVES.
BUT IF YOU RAN THE NUMBERS TODAY, AND I RAN IT JUST ON THE BACK OF THE ENVELOPE FROM WHAT WE JUST TALKED ABOUT FOR THE QUARTER PROJECTION, IT LOOKS LIKE WE HAVE AROUND, UH, 58, 40, 52, 53 ISH.
IF YOU JUST TAKE A SIGN IGN FOR AVAILABLE, I'M NOT COMMITTED OR RESTRICTED TO 53 ISH DIVIDED BY 89 TOP LINE REVENUES YOU GET RIGHT AROUND 60%.
SO WE'RE PRETTY MUCH SMACK DAB IN THE MIDDLE OF THAT RANGE RIGHT NOW.
AND AGAIN, THAT'S CONSISTENT WITH WHAT WE SHOWED THEM TO GET THE RATING.
AND SO THERE MAY BE AN ABILITY TO DEPART AT SOME LEVEL FROM THAT.
BUT WHAT THAT IS IS JUST A QUESTION MARK.
SO WE KNOW WE'RE IN THE SAFE ZONE IF WE STAY THERE, WE KNOW WE'RE IN THE SAFE ZONE AND, AND WE'LL GO FROM THERE THOUGHT ANY QUESTIONS ON AVAILABLE, UH, BALANCE.
I'LL JUST ALSO ADD THAT, UH, I THINK IT WAS THE SUGGESTION BY MR. VOS, BUT IN RELATION TO WHAT YOU JUST SAID, WE DID ADD THE LINE, THIS TARGET IS AN ADVISEMENT WITH CREDIT RATING AGENCIES TO MAINTAIN THE COUNTY'S AAA BOND RATING.
AND THAT, THAT'S WHERE THAT CAME FROM.
THE LITTLE BIT OF WORDSMITHING I HAVE THERE IS IT DIDN'T NECESSARILY ADVISE US.
SO I'M JUST GONNA, THIS IS WORDSMITHING, BUT SOMETHING LIKE THE TARGET IS CONSISTENT WITH THE AMOUNTS, UM, SHOWN TO THE AGENCIES WHEN THE COUNTY ATTAINED ITS AAA RATING.
SO IT IT IS JUST AS CONSISTENT OF WHAT WE SHOWED THEM AS OPPOSED TO THEY'VE ADVISED US THAT THIS IS, YOU KNOW, YEAH.
SO THEY DIDN'T DIRECTLY ADVISE US THAT, BUT THAT'S THE ONLY SUBTLE CHANGE THERE IF WE COULD WORDSMITH THAT.
UM, SO JUST TO SAY IT'S CONSISTENT WITH THE AMOUNTS IN PLACE WHEN WE APPEAR BEFORE THE AGENCIES THAT YOU SEE THE AAA WELL, I I I WONDER IF WE MIGHT CONSIDER, UM, SIZE AND GET REFERENCED IN SIZE AND 'CAUSE I THINK THE GENERAL PUBLIC DOESN'T UNDERSTAND THAT A SMALLER COUNTY LIKE GOOCHLAND HAS DIFFERENT TARGETS 'CAUSE OF OUR TOTAL BUDGET SIZE RELATIVE TO ENRICO OR, YOU KNOW, LOUDOUN COUNTY OR IT'S NOT JUST LIKE ONE TABLE FITS ALL.
IT'S, AND, AND TELL ME IF I'M MIS SPEAKING NO, THAT'S, BUT SIZE MAKES A BIG DIFFERENCE IN THE RATIOS AND CONSIDERATIONS.
IT'S AN EXCELLENT POINT THAT NEEDS TO BE MADE.
UM, IT'S IN THE WORST CASE, UM, EARTHQUAKE, HURRICANE, WHATEVER YOU WANNA CALL NATURAL DISASTER TAKES OUT OUR HIGH SCHOOL.
IT COSTS 55 MILLION TO BUILD A NEW HIGH SCHOOL.
WE HAVE ENOUGH RESERVES TO BUILD ONE SCHOOL.
FAIRFAX, IF THEY SET ASIDE 50% OF THEIR BILLION DOLLAR BUDGET, THEY COULD BUILD A HUNDRED.
SO AS YOU GROW THE NOMINAL DOLLARS YOU NEED ARE MAYBE NOT AS, AS YOU KNOW, HIGH AS YOU NEED.
NOW I, WE NEED A HIGHER PERCENTAGE OF OUR BUDGET BECAUSE THE HARD DOLLAR AMOUNT OF ANY PARTICULAR ITEM THAT COULD AFFECT US IS FAIRLY LARGE IN RELATION TO OUR BUDGET.
THAT'S ACTUALLY THE BEST WAY TO PUT IT.
I THINK IF IF, YEAH, IF WE ADDED A SENTENCE THAT WOULD BE A GREAT EDUCATION ELEMENT TO THE, UH, LANGUAGE JUST FOR THE, BUT FOR THE PERSON CASUALLY READING OR FINANCIAL MANAGEMENT CLASSES YEAH.
YOU IMPLY PEOPLE DON'T DO THAT
I MEAN YEAH, LARGER AS, AS GLAND GROWS GRACEFULLY IT, YOU, YOU MAY HAVE BEEN AT, AT SOME POINT BE ABLE TO SLIDE THAT PERCENTAGE DOWN A BIT BECAUSE THE NO DOLLARS WOULD GROW ENOUGH TO BE SUFFICIENT TO TAKE CARE OF ANY ONE PARTICULAR ITEM THAT MIGHT COME ALONG.
RIGHT NOW WE'RE THE SIZE THAT ONE PARTICULAR ITEM COULD REALLY UPSET US QUITE A BIT.
SO, BUT THAT'S AN EXCELLENT POINT.
QUESTION MR. JIM, HOW DO OPERATING EXPENSES LINK TO THESE FUND BOXES? OR DO THEY ALL
[00:40:01]
CORRECT ME IF I'M WRONG.WE HAVE REVENUES THAT COMMAND EXPENSES THAT GO OUT.
WE'VE GOT A RESIDUAL A LOT ALONG WHICH BE USED FOR CIP MAINTENANCE AND THEN THE BALANCE, THE NET BALANCE FROM THAT WOULD CLOSE OUT TO RESERVES.
SO IF IT'S A DEFICIT, IT DRAWS ON RESERVES IF IT'S POSITIVE TO AN END RESERVE.
SO IT'S THE RESERVES ARE OUR ANNUAL OPERATING BUDGET CLOSES OUT, UH, FUND BALANCE AND IF THERE'S ANY LEFTOVER YOU ADD TO IT.
IF THERE'S NOT, AND ONE OF THE THINGS WE'VE DONE IS COVER THE OPERATING EXPENSE OF THE MAINTENANCE CAPEX BUT ALSO COVER ANY INCREASE THAT MIGHT BE NECESSARY ON THE REVENUE STABILIZATION FUND AND THE AVAILABLE FUND BALANCE TO KEEP THOSE.
'CAUSE THEY'RE DONE AS A PERCENTAGE OF THE BUDGET.
SO TO KEEP THOSE IN LINE WITH ANY GROWTH, UM, YOU PAY FOR YOUR MAINTENANCE CAP BANKS, YOU DO WHATEVER YOU NEED TO DO TO MAINTAIN THOSE PERCENTAGES AND CLOSE THE REST OF BALANCE.
NOW AS A PRACTICAL MATTER, WHAT YOU'VE DONE IS TAKING A LOOK AND SAY THAT THE REVENUE STABILIZATION FUND IS FULLY FUNDED AND IF OUR AVAILABLE RESERVES ARE IN THE TARGET RANGE AND WE HAVE WHAT WE NEED AS FAR AS SUFFICIENT RESERVES GO, THEN SOMETIMES WE WILL VISIT TAKING WHATEVER EXTRA IS LEFT OVER AT THE END OF THE DAY AND SAY, CAN WE PULL AHEAD SOME OF THE CIP PROJECTS OR CAN WE EARMARK IT FOR SOME OF THOSE PROJECTS THAT WE KNOW MIGHT HAVE COST OVERRUNS? YOU KNOW, IT'S MONEY, IT CAN BE ALLOCATED TOWARD DIFFERENT THINGS.
BUT FIRST THINGS FIRST, OBVIOUSLY PAID EXPENSES.
MAINTAIN YOUR CAPITAL ASSETS, MAINTAIN YOUR RESERVES, AND THEN YOU'VE GOT WHATEVER LEFT OVER AVAILABLE TO DO, MAYBE PULL AHEAD SOME PROJECTS OR
DOES THAT MAKE SENSE? IT DOES.
SO THE CHALLENGE THAT THE NEW BOARD WILL FACE IS, YOU KNOW, POTENTIAL REQUESTS FOR SIGNIFICANT INCREASES IN OPERATING EXPENSES DUE TO INCREASED PUBLIC SAFETY.
SO WE'RE ADDING TWO FIRE STATIONS, THAT'S A 25% INCREASE IN WHAT WE HAVE.
BEING AWARE OF THAT AS WE FIGURE OUT WHAT THESE RATIOS NEED TO BE IS GONNA BE CRITICAL AS WE DETERMINE THE SCOPE AND SIZE OF FIRE RESCUE AND PUBLIC SAFETY.
UM, YEAH, THE NEXT BOARD, UH, IS GONNA FACE SOME CHALLENGES.
UH, UM, BUT THE DECISIONS WILL BE ALONG THE LINES OF DO WE ADD PERSONNEL EQUIPMENT TO EXISTING BRICK AND MORTAR OR WHEN DO WE TAKE ON NEW BRICK AND MORTAR? 'CAUSE THAT'S A WHOLE DIFFERENT GAME.
UM, WE HAVE TO OUR PAST 12 YEARS MORE THAN TRIPLED THE FULL-TIME FIREFIGHTERS AND BUILT STATION SIX MM-HMM.
SO AS THE COUNTY'S REVENUES GROW, IT CAN ACCOMMODATE AN EXPANSION OF COUNTY SERVICES TO SUPPORT THAT GROWTH.
AND IT NEEDS TO JUST BE COORDINATED, I GUESS IS WHERE YOU'RE GOING WITH THAT IS TO COORDINATE THE GROWTH OF THE COUNTY WITH THE DELIVERY OF COUNTY SERVICES, PUBLIC SAFETY, PUBLIC EDUCATION.
IT ALL NEEDS TO GROW TOGETHER.
ALL ITS GEARS ARE ARE CONNECTED FROM, FROM AN ACCOUNTING PERSPECTIVE OF IT.
NEIL'S QUESTIONS IN MY MIND, UM, I WOULD CONSIDER THAT, YOU KNOW, A LOT OF THAT EXPANSION ONE TIME HUMAN CAPITAL EXPENDITURES, SO IT'S GOT CAPITAL EXPENDITURES IN THERE.
WE'VE ALWAYS, I FEEL LIKE, AND TELL ME IF I'M WRONG, I FEEL LIKE WE LUMPED IT INTO OPEX AND, BUT, BUT HAVE WE EVER TREATED, DO WE HAVE THE ABILITY AND HAVE WE EVER TREATED IT AS THIS IS REALLY A ONE TIME NECESSITY TO GET TO WHERE WE NEED TO SAY HUMAN CAPITAL? YOU MEAN NEW BODIES? I MEAN NEW BODIES BECAUSE WILL BE RECURRING.
I MEAN IT'S A, WELL NO, IT'LL EVEN EVENTUALLY BE RECURRING, BUT THAT INITIAL BUMP MM-HMM
THAT WE CAN JUSTIFY THAT THAT'S A ONE TIME HUMAN CAPITAL INCREASE.
I MEAN, I'M ASKING FROM AN ACCOUNTING, IF THERE IS A RECURRING SOURCE OF FUNDS, THEY CAN BACKFILL IT.
SO IT'S ONE THING IF YOU SAY THIS YEAR WE WANT TO ADD 20 BODIES TO THE BUDGET, SO LET'S USE FUND BALANCE.
'CAUSE WE DIDN'T ANTICIPATE THAT WE USE FUND BALANCE, BUT NEXT YEAR WE HAVE TO HAVE A RECURRING SOURCE OF FUNDS WILL BACKFILL IT AND REPLACE OUR, OUR, OUR INVESTMENT FROM IT.
SO, YOU KNOW, IT DOES WORK FOR THAT ONE TIME, BUT YOU GOTTA HAVE THAT RECURRING SOURCE OF FUND SOMEWHERE.
IT JUST DOESN'T MEAN IT HAS TO BE RIGHT.
YOU HAVE PLANNING TIME, YOU HAVE, YOU KNOW, THE ABILITY TO ADJUST UPWARD YEARS.
UH, THAT'S THE DEFINITION OF AVAILABLE RESOURCES.
ARE THERE OTHER THINGS? UM, THE ONLY OTHER CHANGE THAT WE MADE WAS, UM, CHANGING THE WORDING IN RELATION TO THE REVENUE STABILIZATION
[00:45:01]
RESERVE.AND WHEN WE CAN DRAW THAT DOWN, UM, OUR OLD POLICY SAID THAT THE THIRD OR FOURTH QUARTER FORECASTED GENERAL FUND REVENUES, WE'RE GONNA CHANGE THAT TO ACTUAL GENERAL FUND REVENUES.
UM, EXCLUDING USE OF PRIOR YEAR FUND BALANCE IN THE OLD POLICY, IF THEY DECLINED MORE THAN ONE AND A HALF PERCENT, WE'RE GONNA CHANGE THAT TO 3% OF REVENUES COLLECTED AT THE SAME TIME PERIOD ONE YEAR TO THE NEXT.
SO WE'RE LOOKING AT A MAJOR DECREASE IN REVENUE FROM ONE PERIOD TO THE NEXT RATHER THAN OUR OLD POLICY DIDN'T EVEN REFER TO WHAT THE DECLINE WAS COMPARED TO SO DECLINED BY ONE POINT A HALF PERCENT DECLINING FROM WHAT? SO WE PUT A LITTLE MORE DETAIL IN THERE OF WHAT WE'RE GONNA USE FOR RESERVE, UM, STABILIZATION RESERVE.
AND WE ALSO DID A LITTLE CHANGING TO THE WORDING WHEN REFERRING TO THE REAL ESTATE ASSESSMENTS.
THE OLD POLICY SAID OUR FORECAST TO DECREASE MORE THAN 3%, WE'RE CHANGING THAT TO HAVE DECREASED MORE THAN 3%.
SO WE HAVE REALISTIC NUMBERS NOW AND IF THEY, THE ACTUAL NUMBERS ARE DECREASING 3% WE CAN BORROW FROM OUR REVENUE STABILIZATION RESERVE.
ON THAT POINT, WE ACTUALLY HAVE IN HAND THE ASSESSMENT FOR THE COMING YEAR BEFORE WE DO THE BUDGET.
SO WE DON'T NEED TO FORECAST, WE KNOW WHAT THEY'RE GONNA BE.
UH, THIS IS AN ATTEMPT TO DEFINE RAIN WHEN WE SAY WHEN CAN I USE THE RAIN DAY FUND? BUT WHEN IT'S RAIN, WELL HOW DO YOU DEFINE RAIN? THE STATE DEFINES RAIN AS UM, A FORECAST THAT'S REDUCED BY MORE THAN 2%.
SO IF THEY FORECAST 10% GROWTH AND IT DROPS TO 8% GROWTH, THEY CAN TAP RAINFALL.
WE'VE DECIDED THAT IT SHOULD BE RAINING BEFORE YOU TAP.
IT'S JUST A DIFFERENT PHILOSOPHY.
UM, THOUGHTS ON THAT? DEFINING RAIN.
BUT WE, IT'S MEANT TO BE THERE.
SO IF THERE'S A TEMPORARY DISLOCATION FROM A RECESSION OR SOME OTHER THING, YOU NOT HAVE TO HIRE
YOU THINK HELP SET US UP FOR SUCCESS.
WE GONNA REPORT THIS A FROM THE COMMITTEE.
THE COMMITTEE GOING TO ACCEPT THIS OR, OH YES.
UM, IF THERE'S NO OTHER COMMENTS ON THE CHANGES, I'LL ENTERTAIN A MOTION TO RECOMMEND TO THE BOARD OF SUPERVISORS, UH, APPROVAL OF THESE, UH, AMENDMENTS TO THE GUCCI COUNTY FINANCIAL POLICY.
WHAT ABOUT THE THINGS WE DISCUSSED INTERNALLY? 'CAUSE I NOTICED, UH, MS K TAKING NOTES.
UH, SO, UM, HOW DO WE CHANGE TO THE CREDIT RATING AGENCY REFERENCE? HOW DO MAKE THOSE REFERENCES IF WE, YOU KNOW, IF WE'RE JUST WORDSMITHING, LIKE YOU SAID EARLIER AS AMENDED SAY AS AMENDED RATHER S THAT'S FINE.
I JUST WANNA MAKE SURE WE MOTION, LET YOU MAKE, I'LL, I'LL LET CHAIRMAN COMMITTEE MOTION THAT YOU'RE VICE CHAIRMAN MR. CHAIRMAN, I, I MOVE THAT THE, OUR COMMITTEE APPROVED FINANCIAL POLICIES RECOMMEND AS AMENDMENT TO RECOMMEND TO THE BOARD.
OUR PARLIAMENTARIAN IS SECONDED.
UH, ALL IN FAVOR SIGNIFY BY SAYING AYE.
[VI. OTHER BUSINESS]
WE'VE GOT ABOUT 10 MINUTES LEFT FOR OUR MEETING HERE.UM, OTHER BUSINESS, DO YOU HAVE THOSE SLIDES? YES.
WHAT I'VE DONE OVER THE YEARS IS, IS STRUCK TO PRODUCE FIVE MINUTES OF A, OF A TOPIC THAT MIGHT BE OF INTEREST TO THE GROUP HERE.
BUT WE TALKED ABOUT, UH, MAINTENANCE, CAPEX AND DEPRECIATION AND LIQUIDATION OF COUNTY ASSETS.
AND WE NEED TO REPLACE, WE'VE TALKED ABOUT A VARIETY OF DIFFERENT SUBJECTS.
TODAY'S SUBJECT FOR FIVE MINUTES IS GONNA BE INFLATION.
WHERE DID IT COME FROM? WHEN'S IT GONNA GO AWAY? AND WHY DO WE CARE ABOUT INFLATION? PRICE OF HOUSES, PRICE OF CARS, PRICE OF A LOAF OF BREAD, WAGES WE HAVE TO PAY TO ATTRACT PEOPLE.
IT, IT JUST PERVADES OUR BUDGET.
SO I THOUGHT IT'S WORTHY OF TWO SECONDS ON INFLATION.
THIS IS FROM THE FEDERAL RESERVE ECONOMIC DATABASE, THE FRED DATABASE.
IT'S OUT IN THE PUBLIC DOMAIN.
THIS SHOWS THE FEDERAL GOVERNMENT'S TOTAL SURPLUS OR DEFICIT FOR THE LAST 125 YEARS, GIVE OR TAKE.
AND YOU SEE FOR ABOUT A HUNDRED YEARS, MAYBE AS MANY AS 200 YEARS, THIS DOESN'T GO BACK ALL THE WAY.
[00:50:01]
GOVERNMENT HAS BASICALLY PASSED A BALANCED BUDGET.THERE'S A LITTLE TINY DIP IN 1944 FOR THE WAR.
WE RAN A LITTLE DEFICIT 'CAUSE OF THE WAR, BUT THEN BACK ON TRACK.
AND THEN FOR SOME REASON, THE LAST 20 YEARS, FROM 2020 LAST 20 YEARS, THE FEDERAL GOVERNMENT HAS JUST LOST ITS MIND AND WE'RE RUNNING MULTI-TRILLION DOLLAR DEFICITS.
THERE'S YOUR SOURCE OF INFLATION AND THAT'S WHY FOR THE LAST 30 YEARS YOU HAVEN'T REALLY FELT INFLATION.
BUT WITH A BALANCED BUDGET, THAT'S PRETTY MUCH WHAT YOU GET.
UM, NOW JUST THINK ABOUT YOUR OWN KITCHEN TABLE ISSUES.
WHEN YOU WANT SPEND MORE THAN YOU TAKE IN, THERE'S A COUPLE DIFFERENT WAYS TO DO THAT.
NOW WE KNOW THE FEDERAL GOVERNMENT'S GOT A $30 TRILLION DEBT.
THE SECOND ONE IS YOU COULD ISSUE DEBT, WHICH IS AN ALTERNATIVE.
AND THE FED HAS A THIRD ALTERNATIVE, WHICH IS TO PRINT MONEY.
AND AS LONG AS THEY ISSUE DEBT TO PAY FOR THESE DEFICITS, THE MONEY COMES OUTTA THE PRIVATE SECTOR, GOES INTO THE PUBLIC SECTOR AND EVERYTHING'S BALANCED.
THE INFLATION GETS TRIGGERED WHEN THEY CHOOSE THE THIRD OPTION, WHICH IS LET'S PRINT INSTEAD OF ISSUING DEBT.
SO IF YOU GO TO THE NEXT CHART, THIS IS THE MONEY SUPPLY.
AND IN THE GREAT RECESSION OF 2008, THE GRAY BAR, THEY PRINTED SOME MONEY TO KEEP THE ECONOMY FROM DOWNWARD SPIRAL, WHICH IS FINE.
UM, AND KEPT PRINTING FOR A WHILE AND THEN STABILIZED FOR 10 YEARS OR SO.
AND THEN WHEN THE PANDEMIC HIT IN 2020, WHICH IS THE FIT GRADE BAR, THEY PASSED SOME EMERGENCY MEASURES AND PRINTED, WELL, IF YOU GO FROM PRE PANDEMIC, WHICH WAS ABOUT 4 TRILLION, WAS THE OUTSTANDING MONEY SUPPLY.
TWO YEARS LATER IT'S 9 TRILLION.
THEY'VE MORE THAN DOUBLED THE MONEY SUPPLY BY ISSUING $5 TRILLION IN TWO YEARS.
SO THEY FIRST RAN THE DEFICITS OF MULTI-TRILLION AND THEN PRINTED TO FINANCE IT AND MONETIZE IT.
NOW THIS YEAR THEY'RE RUNNING ABOUT 1.7 TRILLION DEFICIT AT 10% INFLATION.
THE 30 TRILLION OUTSTANDING GETS DEFLATED BY 3 TRILLION.
SO WITH 10% INFLATION, THE 30 TRILLION IS REALLY 27 TRILLION.
AND THEN THEY INCREASE THE DEFICIT BY 1.7 TRILLION.
THEY'RE ACTUALLY MONETIZING THE DEBT AND GETTING AHEAD OF THE GAME EVEN THOUGH THEY'RE RUNNING DEFICITS.
THEY'RE DOING THIS ON PURPOSE.
I, I DON'T KNOW WHY IT HURTS THE MOST VULNERABLE.
IT'S A DEVASTATING EVENT WHEN, WHEN PEOPLE THAT ARE JUST, JUST BARELY GETTING BY HAVE TO PAY MORE FOR BREAD OR A GALLON OF GAS OR A GALLON OF MILK OR, AND IT JUST CAN'T MAKE ENDS MEET.
THIS IS DEVASTATING TO THOSE FOLKS.
FOLKS AT THE HIGHER END DOESN'T MATTER, THEY JUST TELL THEIR PEOPLE TO CUT, PAY THEIR CHECKS.
BUT THE PEOPLE THAT ARE MOST VULNERABLE, THE ONES THAT ARE JUST REALLY HURT BY THIS NOW THAT'S, THAT'S THE LAST 20 YEARS.
THAT'S NOTHING TO DO WITH POLITICS.
WE NEVER BRING POLITICS INTO THIS BUILDING.
THIS IS REALLY ECONOMICS AND HOW IT AFFECTS EXCLUSIVE COUNTY.
THE PRICE OF OUR HOUSES, THE PRICE OF OUR CARS.
WHEN'S INFLATION GONNA COME BACK DOWN? YOU CAN SEE A 10% INFLATION.
THERE WAS A MOVEMENT THAT JUST THROW, THROW ALL THE BUMPS OUT.
SO YOU SAW THEY STARTED TO ACTUALLY SHRED MONEY.
NOW FOR THE LAST 12 MONTHS, LAST YEAR THEY PRINTED 120 BILLION A MONTH.
THEY PRINTED 120 BILLION A MONTH.
EVERY MONTH YOU SEE THAT CLIMB.
WELL NOW THEY'RE SHREDDING ABOUT 80 BILLION A MONTH TO TRY AND BRING INFLATION BACK DOWN A LITTLE BIT BECAUSE ONCE IT GOT OVER 10% THERE, A LOT OF FOLKS GET PRETTY UPSET.
SO JUST FOR THE PUBLIC'S BENEFIT, SLIDE TWO AND SLIDE THREE.
SLIDE TWO IS A YEAR OVER A YEAR KIND OF INCOME STATEMENT VIEW VERSUS THIS, WHICH IS A BALANCE SHEET STATIC IN TIME VIEW.
I JUST WANT TO MAKE SURE THE PUBLIC DOESN'T VIEW THIS CHART AS YEAR OVER YEAR, LIKE THE PREVIOUS CHART.
THE PREVIOUS CHART WAS A WHAT I'LL CALL A FLOW.
SO THIS IS THE OUTSTANDING STOCK, THE OUTSTANDING BALANCE.
NOW ADVANCED FINANCE AND THE FED PRINTS 5 TRILLION GIVES IT TO THE BANKS.
THE BANKS DON'T PUT THE 5 TRILLION IN THE BOTTOM DRAWER, DO THEY? THEY TAKE FOUR OF FIVE OUT THERE AND WON'T LEND IT BACK OUT.
RIGHT? THEY HAVE TO DO 10% RESERVES, RIGHT? SO 10% LEVERAGE.
YOU PRINT 5 TRILLION, THEY'RE PUTTING 50 TRILLION IN THE ECONOMY BECAUSE WE HAVE A FRACTIONAL BANKING SYSTEM, THEY ONLY KEEP A FRACTION DEPOSITS ON ON HAND AND THEN LEND THE REST OUT.
SO THE MONEY MULTIPLIER IS 10 TIMES THIS.
AND SO PEOPLE RUN AROUND SCRATCHING, YOU KNOW, WHERE'D IT COME FROM? THAT'S WHERE IT CAME FROM.
I, I DON'T HAVE A SOLUTION, BUT WE HAVE TO TAKE THIS INTO ACCOUNT AND WE MANAGE THE COUNTY'S FINANCES AND LOOK AT THE INFLATIONARY IMPACTS AND WAGES, PRICES, UM, TAX REVENUES, IT ALL DOESN'T IMPACT US IN A BIG WAY.
SO THAT'S WHY I WANT TO SPEND JUST FIVE MINUTES ON WHERE IT CAME FROM, WHERE IT'S HEADED.
[00:55:01]
AND UNFORTUNATELY THE TRENDS IN THAT PREVIOUS CHART, THE TRENDS ARE NOT GOOD.UH, IF YOU GO BACK TO THAT PREVIOUS CHART, IF YOU JUST DREW A REGRESSION LINE, THE TRENDS ARE NOT GOOD.
THIS IS LOWER LOWS AND LOWER HIGHS EVERY TIME YOU GO DOWN THAT ZIGZAG.
AND I DON'T KNOW WHERE IT'S, I REALLY DON'T, BUT ALL WE CAN DO IS WE'RE WE'RE CORKS BOBBING ON THE SURFACE OF THE WATER HERE.
AND THIS IS THE WATER THAT'S, YOU KNOW, MOVING US AROUND.
BUT IT'S AT LEAST NICE TO KNOW WHAT'S GOING ON, AT LEAST HAVE SOME VIEW.
SO THAT WAS MY FIVE MINUTE EIGHT
BY THE WAY, GOON STILL HAS THAT FLAT BALANCE BUDGET LINE GOING.
I HAD FOR OTHER BUSINESS, IF THERE'S NO MORE COMMENTARY ON THAT,
[VII. PUBLIC COMMENT]
UM, PUBLIC COMMENT IS THE NEXT ITEM ON THE AGENDA.WE'VE GOT ABOUT TWO MINUTES YOU'D LIKE TO MAKE, FILL OUT THESE TWO MINUTES.
YOU DON'T HAVE TO USE THE ENTIRE TWO
UM, JUST A COUPLE OF THINGS, UH, MICHAEL, A COUPLE OF ACRONYMS. O-P-E-D-I-I LIVE IN A WORLD OF ACRONYMS AND THAT'S THE NEW ONE TO ME.
I I CAN TELL YOU THAT'S OTHER POST-EMPLOYMENT BENEFITS.
SO THE BAIN DRIVER IS HEALTH INSURANCE.
AND UM, ALSO I HEARD AN M-D-N-A-M THAT IS A MANAGEMENT DISCUSSION AND ANALYSIS.
SO IT'S JUST US ELABORATING ON WHY CERTAIN THINGS INCREASE OR DECREASE.
THAT'S, I WON'T THROW SL SIX OR MY THE OTHER IN, IN READING THROUGH AND MR. BO'S COMMENT ABOUT THE CASUAL READING.
I, I DID WADE THROUGH THIS WITHDRAWAL AND, UH, DRAW DOWN WERE SOMETIMES USED INTERCHANGEABLY.
AND BECAUSE WE HAVE SOME DETAIL IN HERE, I WANTED TO MAKE SURE WITHDRAWAL WAS THE SAME AS A DRAW DOWN.
IN WHAT CONTEXT? WELL BALANCE YOU TALKING ABOUT FUND BALANCE? YEAH.
IT SAYS WE'RE GONNA HAVE WITHDRAWAL OR A DRAW DOWN, WHICH I SIMPLIFIED AS THERE'S SENTIMENTS.
I MEAN WE, WHETHER YOU, AND I'M THINKING BACK TO THAT CASUAL READER IS GOING TO, I HAD TO STOP AND SAY WE'RE TAPPING RESERVE.
THERE'S A VARIETY OF DIFFERENT WAYS YOU COULD DESCRIBE IT, BUT IT'S JUST ACCESSING OR USING USE OF RESERVE, USE OF FUND BALANCE.
AND I WAS LOOKING IF THERE'S AN OPPORTUNITY TO MAKE A UNIFORM, SO TO WHAT'S THE DIFFERENCE BETWEEN A WITHDRAWAL AND, AND A DRAW DOWN.
I JUST PERSONAL EXPERIENCE MAKING SURE I CONFIRM WHAT THE TWO, THE SAME.
SO GRANT THAT IT, YES, IT'S EASY.
WELL YOU SAID DON'T USE IT ALL.
WELL, AND A LOT OF THESE POLICIES ARE COUNTIES MIRROR EACH OTHER.
WE DON'T WANT TO RECREATE THE, UH, WHEEL WITH EVERYTHING.
SO I I I WOULD GUESS WE DIDN'T NECESSARILY DECIDE THOSE TWO SENTIMENTS.
I THINK, YOU KNOW, IT'S LIKE GAP
SO I WOULD THINK TO THE PUBLIC THAT'S IT'S, WE, WE CAN ONLY WORDSMITH SO MUCH
ANY COMMENTS? THE OTHER CITIZEN, THANK YOU ALL FOR MAKING THESE WONDERFUL CHANGES THAT WERE NOT HERE 12 YEARS AGO.
UM, AND FOR PUTTING THE COUNTY ON THE STRAIGHT AND NARROW FINANCIAL THANK YOU.
I'M BRING YOU A LITTLE EXTRA TIME YOU'D LIKE TO CONTINUE THAT QUESTION.
UM, WE UH, WE DO A BETTER JOB THAN WE PEOPLE TO WATCH IT.
[VIII. ADJOURNMENT TO 12:30 PM FEBRUARY 06, 2024]
I MOVE THAT WE ADJOURN TO 12:30 PM ON FEBRUARY 6TH, 2024.SO, I'M SORRY, DID I MORE DISCUSSION FIRST IF IT'S OKAY? YEAH, YEAH.
I THINK I'D BE REMISS IF WE, I DIDN'T TAKE A MOMENT TO THANK YOU FOR YOUR LEADERSHIP IN THIS.
I DON'T KNOW HOW MANY YEARS BEFORE THE FOUR THAT I JOINED, UH, YOU'VE BEEN DOING THIS, BUT, UM, THE, THE WHOLE TIME I'VE BEEN HERE.
SO, YOU KNOW, I THINK, UM, I DO BELIEVE THAT PEOPLE ARE APPOINTED AT A CERTAIN AMOUNT, AT A CERTAIN TIME FOR A CERTAIN THING.
AND, UH, WHAT YOU'VE DONE FOR THIS COUNTY FROM A FINANCIAL PERSPECTIVE, UH, THE COUNTY CAN NEVER REPAY IT OR FORGET.
UH, IF YOU GO ON ANY LONGER, I'M AGAIN,
YOU WERE, UH, THANK YOU FOR THAT MR. CHAIR.
RIGHT BACK AT YOU FOR YOUR SERVICE.
I APOLOGIZE FOR MY PREMATURE MAYOR.
MR. SECOND MOVE THAT WE ADJOURN TO 1230
[01:00:01]
FEBRUARY 6, 20, 24 MAY, AT WHICH TIME THERE'LL BE A REORGANIZATION AND AN APPOINTMENT OF NEW LEADERSHIP.UH, DO WE HAVE A SECOND FOR THAT? SECOND.