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