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Caroline County advisers warn reserves could shrink as budget pressures mount
Summary
At a March 24 briefing, the county—inancial adviser told supervisors that unassigned fund balance may shrink in FY25and FY26 after accounting adjustments, and that debt-service constraints limit near-term borrowing without new revenue. The board scheduled a budget work session for March 31 to set an advertised tax rate.
Courtney Rogers, financial adviser to Caroline County, told the Board of Supervisors on March 24 that the county—aces tightening budget conditions even though reserves remain above policy. "We were able to add substantial dollars in '22 and '23. Fund balance did grow," Rogers said, but cautioned that accrual accounting and planned mid-year appropriations could push the unassigned fund balance down by about $600,000.
The briefing traced how federal pandemic-era funds (CARES and ARPA) increased reserves in 2021and 2022, then masked the underlying operating trend. Rogers said FY25 looks roughly break-even on a cash basis but that the transition out of one-time federal funding and lower interest earnings could reduce the county's margin in FY26.
Board members pressed staff for clarity. "Our constituents are asking us to do our absolute best as we work through the budget," said Supervisor Thomas, noting concerns among seniors and fixed-income households about rising costs. Several supervisors asked staff to produce a version of Rogers—und-balance chart that separates CARES/ARPA inflows from recurring operating revenue to give a clearer picture of long-term trajectory; Rogers agreed to provide that breakdown.
Debt service and borrowing capacity were central to the presentation. Rogers said the county's current debt-service payments and policy ratios limit near-term new borrowing; a conservative analysis showed roughly $7 million of immediate borrowing capacity tied to available annual tax-supported debt-service dollars, with larger borrowing possible only as current debt drops off in later years. Rogers also discussed a potential statewide 1 percent sales-tax option for school capital that could produce an estimated $4.4to $4.7 million a year for Caroline under current estimates, which staff said would materially change the county's capital capacity.
The board set a budget work session for 6 p.m. March 31 so supervisors can review the administrator's proposed budget and decide the tax-rate figure to advertise (an April 1 newspaper-ad deadline was cited as the reason for the timing). The meeting will include a review of personnel requests, mid-year appropriations, and transportation and capital proffers ahead of planned public hearings.
Next steps: staff will provide the CARES/ARPA-adjusted fund-balance chart requested by supervisors and distribute the budget packet in advance of the March 31 work session.
