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36 <br /> 1 representation of the County's ability to pay debt obligations on an annual basis. If debt <br /> 2 service is growing at a higher rate than general fund revenues, the proportion of the <br /> 3 County's budget that is dedicated to debt will increase and lower the ability to fund other <br /> 4 operating expenses. The County's current policy is to maintain annual debt service costs <br /> 5 at or below 15% of general fund revenues. The County has modestly exceeded this policy <br /> 6 in the past. According to one rating agency, a "strong" position is 8% to 15%, and an <br /> 7 "adequate" position is 15% to 25%. In FY2023-24, debt service is 13.60% of total general <br /> 8 fund revenues. This ratio is tracked in each of the financing scenarios below. <br /> 9 <br /> 10 Model Assumptions <br /> 11 The debt model makes several assumptions to predict the likely impact that a given amount of <br /> 12 borrowing will have on the debt service to general fund revenue metric and the property tax rate <br /> 13 required to make annual debt service payments. <br /> 14 <br /> 15 Assessed Value <br /> 16 The assessed value growth assumption is important because it is directly linked to the <br /> 17 debt service to assessed value metric discussed above, and it dictates the amount of <br /> 18 revenue that each penny on the property tax rate can generate. <br /> 19 <br /> 20 In most years, assessed value grows by approximately 2% annually. However, in years <br /> 21 in which a revaluation occurs, assessed value grows at a much higher rate as all of the <br /> 22 real property in the County is valued as closely as possible to market value. The <br /> 23 Department of Revenue has indicated that current market values are well above the <br /> 24 assessed values that were established in the 2020 revaluation. In the second quarter of <br /> 25 2023, the NC Department of Revenue estimated that current assessed values are <br /> 26 representing approximately 64.8% of market value. As a result, total assessed value may <br /> 27 increase by as much as 50% when adjusted to market conditions, increasing the value of <br /> 28 one penny from $2,304,674 to $3,476,344 which is reflected in the debt model. In future <br /> 29 revaluation years, the rate of growth is moderated to approximately 11% which is <br /> 30 consistent with prior revaluation years. <br /> 31 <br /> 32 Total General Fund Revenue <br /> 33 Total General Fund Revenue is primarily comprised of property tax (68%) and sales tax <br /> 34 (15.6%). Total property tax collections are calculated by applying a tax rate to total <br /> 35 assessed value which is assumed to grow as described above. Sales tax collections are <br /> 36 assumed to grow at a rate of 4% annually. Additionally, the model assumes that the <br /> 37 operating budget will increase by 3% annually which requires associated revenue growth. <br /> 38 <br /> 39 Current Existing and Planned Resources <br /> 40 The County has already authorized and planned funding in the Capital Investment Plan <br /> 41 (CIP) that would partially address the needs identified in the facility studies. The County <br /> 42 has approximately$202 million in existing and planned tax supported capital investments, <br /> 43 and the School Districts have approximately$148 million in approved and planned funding <br /> 44 to address the Woolpert Scenarios. Funding for school recurring capital and technology <br /> 45 investments are not included in the effort to fund the Woolpert recommendations. <br /> 46 <br /> Count Projects Approved Projects Not Financed $10 million <br /> Count Projects —Ten Year CIP $192 million <br /> Total Existin and Planned $202 million <br />