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Repair County Finances.

Karen Hartley-Nagle
A FRESH VOICE • THE RIGHT CHOICE
FOR
COUNTY COUNCIL PRESIDENT

 KAREN HARTLEY-NAGLE HAS A PLAN 
FOR NEW CASTLE COUNTY

Repairing County Finances.

Karen Hartley-Nagle is seeking this office to correct decisions that have left New Castle County in a most vulnerable financial situation.  Our County has been spending at a frightening pace, and our retirees' pension and healthcare funds are vastly underfunded.

The County is on its way to spending down all the Available Financial Reserves and the resulting lower Bond Rating, which would result in higher taxes and cutting services.  

Karen Hartley-Nagle will not allow that to happen.  She will provide the leadership to turn around our deteriorating financial condition with aggressive oversight of budget spending.  Among candidates for Council President, only Karen has pledged to vote NO on raising taxes.

“If we don’t attack this problem head-on now, we face the likely possibility that we, our children, and grandchildren will have to pay for their overspending,” says Karen Hartley-Nagle. 

THE DECLINE AND FALL OF NEW CASTLE COUNTY FINANCES.

New Castle County's last General Fund annual operating surplus ($1.6 Million) was in FY 2012. Then, the AVAILABLE FINANCIAL RESERVES totaled $57 Million. Since then the General Fund has shown RED for Fiscal Years 2013, 2014, and 2015.

This last year (FY 2015) showed a $5 Million DEFICIT and the DEFICIT SPENDING will continue through FY 2020 according to the County's website (3/31/2016-General Fund Cash Flow Projections)

Today, FY 2016, the County is projecting its AVAILABLE FINANCIAL RESERVES  at June 30, 2016, to be $37 Million and by the end of June 30, 2020, this government is forecasting (as of 3/31/2016) to DEFICIT SPEND  the  "checkbook" down to "change" ($100,000).

Essentially all AVAILABLE FINANCIAL RESERVES are projected to be spent.....leaving TAXPAYERS with a HUGE TAX INCREASE.

The future of New Castle County is at stake if we allow the current and projected DEFICIT SPENDING to continue.  Those who reject this scenario, only have to visit New Castle County's website on Finances to read about what is to come......THE DECLINE & FALL OF NEW CASTLE COUNTY FINANCES.

Failing To Heed Fiscal Responsibility And The Cautionary Advisement Of All THREE Bond Rating Agencies.

Fiscal Strategies Group’s warnings on February 19, 2009 to NCC re: THREATS to the County bond ratings:

* Declining fund balance
* Unconstrained expenditure growth
* Potential volatility and decline in the transfer tax
* Continued deterioration in the County high-wage manufacturing base
* Operating deficits


Importance of Reserve Floor to Retaining the AAA Rating: “It is critically important that the County continue down the path of restoring balance of recurring revenues and recurring expenditures in the General Fund if it is to retain its AAA ratings.

The importance of restoring balance and avoiding continuing erosion of financial reserves was raised by all three rating agencies in the recent credit review, and Fitch went so far as to change their outlook on the rating from stable to negative, and specifically emphasizing this issue in their report: “As the County seeks to achieve structural balance, further draws on reserves beyond fiscal 2009 are projected.

Fitch will continue to monitor the county’s progress in obtaining Budgetary stability while maintaining sufficient financial flexibility.”

Since 2009, the County increased the property tax rate in the Unincorporated area.  In FY 2010 County Council adopted a 25% rate increase, from $0.5614 to $0.7018.  In FY 2012 County Council adopted a fractional rate decrease, from $0.7018 to $0.7006, and remains the current property tax rate (Unincorporated area).  

The FY 2010 rate increase boosted the Property Tax budget by $22 Million  over the prior year Actuals; and including the FY 2017 Recommended Budget has added $200 MILLION dollars to the General Funds budgets (FY 2010-FY 2017).

Unfortunately, by the end of FY 2016, the County projects most of that huge tax infusion will have been spent, leaving only $37.1 Million in the General Fund’s “CHECKBOOK”.

Further deterioration of the “CHECKBOOK” will continue year after year over the next four years, according to the March 2016 projection, VIRTUALLY DEPLETING ALL “AVAILABLE FINANCIAL RESERVES”.  (Despite the 2009 Warning of DECLINING FUND BALANCES)

Since 2009, the County borrowed substantially and increased its already growing Debt Burden. In FY 2009 the Debt Service (Principal & Interest) reached $400 Million, and rapidly escalated to $645 Million for FY 2016.  This is a 61% increase in debt burden the County leadership has placed on the backs of its taxpayers.

Based on County budget documents, additional borrowings of $120 Million will occur by the end of FY 2020....only a few years away.  Moody’s Investor Services in January 2015 advised the County that a “Substantial increase in debt burden” could make the RATING GO DOWN! (Click the link to view the 2015 Moody's Investor Services Report with Highlighted Cautionary Notes)

Since 2009, the County’s General Fund financial statements signal a developing trend of OPERATING DEFICITS.  The last General Fund OPERATING SURPLUS was in FY 2012 under County Executive Paul Clark.  Since 2012, the financial statements reveal OPERATING DEFICITS in FY 2013, FY 2014 and FY 2015.

Based on County projections (March 2016), OPERATING DEFICITS are likely to continue UNLESS leadership recognizes “The importance of restoring balance and avoiding continuing erosion of financial reserves” (all 3 Rating Agencies admonitions in 2009); and the potential for the County’s Rating to drop (Moody’s Investors Service’s OUTLOOK of January 2015).

If NCC continues the “protracted imbalanced operations reducing reserve levels” and borrowings which result in a “substantial increase in debt burden”, the government in the next 3-4 years will have drained the “CHECKBOOK”, be facing an ignominious Bond Rating  reduction, and be announcing to County taxpayers the largest tax increase in the history of New Castle County Government!!!                                 

"The Gordon/Hollins Team is Addicted to (OPM) Other Peoples Money." - Karen Hartley-Nagle

"The first step to solving any problem is acknowledging that there is one - New Castle County has burned through an historic 30% of its available financial reserves in only 12 months. At last nights debate, my opponent, eager to co-sign anything Gordon says, handed out this piece of paper which, he claims, shows that NCCo is in great financial shape. What's missing from this 2015 document, of course, is the drastic draw down of reserves that has since occurred, which is the point. I urge my opponent to read the ordinance he recently voted in favor of (16-072), which includes more recent account balances and illustrates the cause for urgency", said Karen Hartley-Nagle.

See The News Journal article on GHADA Candidate Debate at Hockessin Memorial Hall for President of New Castle County Council and County Executive 8-15-2016: http://www.delawareonline.com/…/ncco-government-c…/88811730/


"Over the last 6 months, New Castle County's monthly checkbook has transformed from what was once an easy to read snapshot of available financial reserves to something so complex that even Warren Buffett wouldn't be able to understand. Amid scrutiny of reckless spending of County reserves, NCC has changed its calculation of available financial reserves no less than 3 times in 6 months. These unilateral changes, made without explanation, are indicative of financial shenanigans, designed only to confuse the reader and mask the true state of NCC's financial condition", said Karen Hartley-Nagle.

Reserve Spending: The Canary in NCC's Coal Mine -
In January 2015 Moody's cautioned New Castle County about what was, at the time, only a modest draw down of reserves. They warned that any "further reducing of reserve levels" could cost NCCo its AAA credit rating. With total disregard to the warnings of the major rating agencies, Gordon and my opponent have since spent an astounding 32% of NCC's available financial reserves (in only 12 months). Currently at $34 million, NCC's available financial reserves sit at the lowest level in decades, placing our AAA credit rating in more jeopardy than it has ever been.

 


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Karen Hartley-Nagle
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