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Finance staff warns Gloucester County utilities fund will just meet FY27 covenant; FY28 likely needs more revenue
Summary
County finance staff told supervisors the utilities fund includes $8.5 million in debt-funded projects and must meet a revenue covenant requiring net revenues equal to 120% of debt service; FY27 would narrowly meet the covenant but FY28 would likely need additional revenues.
Miss Callaway told the Board the utilities fund currently includes about $8.5 million in projects proposed to be debt‑funded and described a revenue covenant that constrains borrowing: net utility revenues, after operating expenditures, must equal 120% of debt service.
"The net revenues of the utility must equal 120% of the debt service," Miss Callaway said, explaining staff’s review shows the proposed FY27 budget would meet that requirement only narrowly. She warned that if the board proceeds with using debt funding to pay first‑year interest on major projects such as Main Street, fiscal year 2028 would require additional revenues beyond the present projections.
Board members pressed for options to shore up the utilities fund (one suggestion was dedicating a portion of any tax increases to utilities or moving the system to an authority structure). Miss Callaway said the budget as presented includes one‑time and reserve measures but that long‑term solutions or additional revenue will be needed if major debt is issued and FY28 revenue projections remain as currently modeled.
Ending: Supervisors asked staff to continue modeling the utility debt scenarios and to include impacts in the Thursday presentation to the full board.
