Stafford County adopts midyear financial actions, authorizes arbitrage repayment and releases part of appropriation hold

Chief Financial Officer Andrea Light told the Stafford County Board of Supervisors on Jan. 21 that the county’s midyear financial picture has improved but requires close monitoring around real estate revenue and health insurance costs.

“All $29,000,000 has been obligated,” Light said of American Rescue Plan Act funds, underscoring that ARPA commitments are in place while most funds already are expended. She also told the board that real‑estate tax revenue is tracking about 2.1 percent, roughly $5 million, below budget so far while personal property revenue is outperforming expectations by about $5 million.

The board approved three resolutions presented with the midyear report. The actions follow staff recommendations to budget and appropriate positive results of operations from FY2024, to set aside funds to cover excess interest earnings on school bond issuances (arbitrage repayment), and to release most of the county’s five‑percent appropriation hold while retaining a vacancy savings reserve.

Why it matters: the midyear actions allow the county to obligate and deploy one‑time and recurring funds identified in FY2024 results, meet federal tax rules on bond proceeds, and provide limited budget flexibility heading into the FY2026 process. Light cautioned the board to watch real estate valuation impacts related to state tax relief programs and rising health‑insurance claims.

Most important facts

- ARPA: Light said the county has obligated its ARPA allocation, noting $29 million in obligations with most already expended. She called that “a huge win.”

- Revenues: Real‑estate tax collections are projected below budget by about 2.1% (~$5 million). Personal property and some other local taxes (sales tax, recordation) are above prior‑year levels and helping overall general fund revenues.

- Arbitrage: School bond proceeds earned excess interest; staff recommended budgeting approximately $3.5 million to repay IRS arbitrage liabilities. Light explained this is a federal tax rule tied to tax‑exempt bonds.

- Vacancy savings: The board approved releasing most of the 5% appropriation hold but retained $2 million tied to vacancy savings until later in the budget cycle.

Votes at a glance

- Resolution R25‑11 (Budget and appropriate positive results of operations from FY2024): approved unanimously (7–0). - Resolution R25‑12 (Budget and appropriate excess interest earnings on school bonds for arbitrage repayment): approved unanimously (7–0). Staff reported roughly $8.3 million was earned and about $3.5 million must be paid back; remaining funds are available for eligible school capital uses. - Resolution R25‑13 (Release of a portion of the FY2025 5% appropriation hold): approved unanimously (7–0).

Supporting details and context

Light told the board that rollback taxes and recordation fees are rebounding, and that interest revenue has slowed from prior‑year highs but remains a positive contributor. Health‑insurance claims are rising toward pre‑COVID patterns and are running over budget; staff flagged that trend for future consideration.

The board discussed possible uses of excess bond interest if they remain after arbitrage obligations and confirmed such funds would be restricted to eligible school capital projects or to pay debt service if no eligible projects remain.

Ending

Members voted unanimously on all midyear items after discussion. Light said staff will continue to monitor revenues closely and bring updates as the budget season progresses.