Fiscal Sustainability Review
The twenty-year projections show that, in the General Fund, the District has an infrastructure gap in the long-term forecast due to insufficiently dedicated reserves for replacement of capital assets. The District does have some relatively new capital assets, which serve to minimize the annual asset investment requirement in the short-term. However, the challenge is that the District has a growing capital and infrastructure replacement obligation in the long-term, and also has other assets for which insufficient investment has been made.
The District has been collecting $6.5 million less per year, on average, than what will be required for capital asset expenditures between 2016 and 2035. As of 2027, the District will have rising capital asset replacement requirements year-over-year, and that trend should continue well past 2035. The $6.5 million gap estimate is the difference between the District’s recent capex tax dollars of $7.4 million in the annual budget for the General Fund and the District’s new capex data which requires an average projected replacement of $13.9 million per year.
To begin to close this gap, in 2016 the District has established an asset levy of $186 annually for the average household and business, which adds an additional $3 million to the amount provided for asset investment, for a total of $10.4 million. A system of asset reserves to manage this investment has also been established.
This leaves an apparent gap of $3.5 million in required future asset investment funding ($13.9M-$10.4M). However, it is important to understand that $13.9 million is an average projection figure; it is a baseline over twenty years only for the General Fund assets which excludes all other District funds. In some years the requirement may be greater; in some years, it is less. It is incumbent upon the District to manage its asset investments year over year so that annual asset investments are reasonable.