Friday, November 18, 2011

Guilford County's "FY 2012 – 2021 CAPITAL INVESTMENT PLAN UPDATE": Is Guilford County masking unsustainable debt increases with false assumptions?

"The Guilford County Capital Investment Plan (CIP) for FY 2012–2021
totals $638,076,174.

...The CIP is funded by three primary sources of revenues:
debt, local funds, and federal or state funds.

Debt, generally in the form of General Obligation Bonds,
accounts for 71% of total Plan revenues.

Locally generated funds account for 28% of revenues
(this assumes Board reinstatement
of an annual pay-as-you-go allocation for major capital needs
as discussed in the Local Revenues section).

Meaning tax increase?

...the county also considers
the following local debt management guidelines:

General obligation debt issued
as a percentage of assessed property valuation
should not exceed 3%.

...For the fiscal year that ended June 30, 2011,
the County’s net debt is equal to approximately 2.5%
of the assessed value of taxable property...

If Guilford County is going to revalue "assessed value" in 2012,
and "taxable property" comes in about 20% lower,
could "the County’s net of the assessed value of taxable property
be about 3.1%, violating "debt management guidelines"?

General obligation debt service
should not exceed 15% of the operating budget

Based on estimates,
the County will exceed its fiscal years 2013 - 2018.

At its highest, debt service will peak at just over 17%
of the operating budget in FY 2013-14.

If two of the three "debt management guidelines" are breached
should Guilford County still borrow the money?

If revenues come up short,
does net debt % of assessed values rise even more?

Assumptions included in the Plan:

...projections represent the best estimates available
at the time the CIP was prepared.

The Plan is a living document and will be adjusted
at least annually to reflect current information.

Future year figures have been adjusted to account for inflation
according to the following schedule
which was developed last year for a planned update to the CIP.

Inflation Factors:

FY 2011 - 1.02%

Is the cost of living going up by about 1% per year?

FY 2012 - 1.04

Who is expected to supply how much money from where
for state, municipal, equity, real estate and corporate investments,
if sovereign nations want to borrow more than $10 trillion per year
for the foreseeable future?

FY 2013 - 1.06

At what point do those who promote and/or vote
for ever increasing sums of government backed debt
to finance what may not be necessities
bequeath an unsustainable burden
on the future incomes of the community’s young?

FY 2014 - 1.09

Should you question those with less to lose,
who may think you have what they need,
who may be saying what you want to hear,
while urging you to do what they don’t want to or wont?

FY 2015 - 1.11

If some financial estimates and hypothetical illustrations
assume relatively perpetual levels of varying data,
can some valuation measures be manipulated?

FY 2016 - 1.14

You shall not bear false witness against your neighbor.

Exodus 20:13

FY 2017 - 1.17

You shall not raise a false report.

Exodus 23:1

FY 2018 - 1.20

Can some come to irrational conclusions
to justify erroneous assumptions?

FY 2019 - 1.23

If you choose not to know something,
especially if that something is something you should know,
you are morally blameworthy.

Robert P. Lawry
Director of the Center for Professional Ethics

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