“It’s not free money” — Chair Phyllis Randall 

Amidst FY2024 unassigned funds discussion, BOS approves recommended uses

By Sophia Clifton

On Jan. 7 the Loudoun County Board of Supervisors discussed agenda item 3a “FGOEDC Report-FY24 Uses of Unassigned General Fund Balance” and approved (9-0) several recommended uses for these funds proposed by the FGOEDC. The Board also voted 9-0 to approve an additional use brought to the floor by Supervisor Koran Saines (D-Sterling) regarding a sanitary district program. The Board voted 7-2 to approve another use introduced by Supervisors Laura TeKrony (D-Little River) and Caleb Kershner (R-Catoctin) concerning a revenue replacement grant for tax year 2025 to towns that eliminate their vehicle license fee. 

During the Finance/Government Operations and Economic Development Committee meeting on Dec. 10, 2024, the FGOEDC reviewed the county’s FY2024 fund balance, which totaled nearly $260 million. 

This number—$259,577,119 to be exact—was much higher than normal due to budgeting by the county regarding projected revenue from data center real estate and personal property taxes. In 2024, the county generated nearly $100 million of that balance through data center tax revenue alone. 

Uncertainty surrounding recent legislation passed by the Virginia General Assemblyinvolving data center property appraisal was the primary cause for the large amount of unassigned funds remaining at the end of FY2024. Furthermore, Dominion Energy supply constraints were thought to potentially impact data center outfitting, which could have also lowered revenue in this area.

With such a large amount available, the FGOEDC recommended 5-0 for the Board of Supervisors to approve the following proposed uses for the unassigned general fund balance, per a Jan. 8 County press release:

• $69,244,201 for one-time needs in the FY 2026 capital budget.
• $60,000,000 in contributions to the county’s fiscal reserve and stabilization funds and Other Post-Employment Benefits Trust.
• $9,756,500 to LCPS for one-time operating expenses and capital projects.
• $103,604,834 to active county capital projects, including funds for sidewalks and trails projects, and contingency funds for county projects, land acquisition and LCPS capital projects.
• $16,971,584 for Board-directed uses, including the following: acceleration of the Cascades Library and Senior Center Complex project; Belmont Ridge corridor safety study and improvements; Destiny Drive corridor study and improvements; invasive species removal grant program; micro-transit pilot program; replenishing of the county’s business incentive funds; water testing for Goose Creek; housing fund contribution; revenue stabilization for a parking garage at the Ashburn Metro Station.

During the Jan. 7 meeting, the Board approved the above recommendations from the FGOEDC and voted to also add a sanitary district program and a town vehicle license fee revenue replacement grant program for tax year 2025 to the list of Board-directed uses.

Chair Phyllis Randall (D-At Large) opened the floor by addressing negative press surrounding the particularly large amount of unassigned fund balance left over from FY2024. 

“There has been some reporting on the unassigned fund balance that has been, maybe not purposely misleading, but has definitely missed the mark on what a fund balance is and how it should be used … It’s not a slush fund, it’s not free money, it’s not pet projects—it’s really money that is already accounted for because it rolls right into the next year,” said Randall.

Staff member Megan Bourke, director at the County Administrator’s office, explained to the Board that “an unassigned fund balance is an accumulation of prior years’ fund balances that, if it goes unspent in the subsequent process, continues to accumulate.” 

“The Board has been very purposeful in programming that unassigned fund balance to already articulated priorities of the Board or current capital projects of the Board, as well as adhering to your fiscal policy, which is to cash fund your capital program in the next year,” Bourke continued. 

“A significant amount of the unassigned fund balance recommendations that you have tonight are either sending the unassigned fund balance to meet your cash contribution requirement for FY2026, or replenishing contingency accounts in this year’s budget to support your capital programs, so that you’re not having to issue additional debt in the future.” 

Randall said, “I never assume that our publications are saying something that is purposely incorrect, but having read all the stories, I have felt that—if you don’t know what this is, they can be misleading, and they have resulted in people saying that ‘Well, you’ve got this much money left to spend, you’ve got $250 million, I want you to send it back’ and that’s just not true.”

“It’s not real money … That amount of money is not what we actually have to use or spend. Quite frankly, we have been able to lower the tax rate year over year because we do approach these things very conservatively.” Randall then asked Supervisor Matthew Letourneau, (R-Dulles) to provide his thoughts. 

“One of the confusing pieces is the concept that we should be giving money back because there’s a surplus. Effectively, what a significant part of this motion is doing is actually that—but the way that it’s doing that is by applying that fund balance to expenditures that would otherwise be in the operating budget in future years. 

“If we weren’t addressing some of these items, such as cost overruns on capital projects for LCPS and County … then we would have to include those in the upcoming budget and that would increase the tax rate,” Letourneau explained.

“The other thing is, some citizens have raised the question ‘Why wouldn’t we simply just rebate the money?’ The money has to be rebated proportionally back to those users who aren’t spending it. In this case, a significant part of our revenue is coming from the data center industry, so that’s where most of the “rebate” would go to; it wouldn’t be to individual citizens.” 

“This is a better way to approach this,” Letourneau continued. “A significant part of this is going into our reserves in order to meet our fiscal policy, in order to have a certain percentage of our funding available for future uses should they be needed in the event of an emergency, as well as a revenue stabilization fund that we created.”

“These are good uses of funding, it’s not simply that the board is just deciding to spend a lot of this money willy-nilly. This is all very well thought out and a component of our overall budgeting strategy that will allow us hopefully to have a lower tax rate in the future, as well as some of the other things that we’re doing, such as lowering the vehicle personal property tax rate,” Letourneau concluded.