Financial adviser urges Northumberland County to adopt 20% fund‑balance minimum ahead of FY27 budget

Austin Saxs, a financial adviser with Davenport & Company, told the Northumberland County Board of Supervisors on May 28 that the county should adopt a minimum unassigned fund balance of 20% of annual expenditures and create a separate budget‑stabilization fund capped at 2%.

Saxs, who spoke during a presentation on fund‑balance policy and FY27 budget scenarios, said the policy would reduce the county’s reliance on short‑term borrowing such as revenue anticipation notes (RANs). He noted that the county previously issued a RAN when cash on hand was low and that Davenport helped secure roughly $5 million in short‑term financing last year to cover payroll and other operating needs. "We'd recommend 20%," Saxs said, explaining that the county historically operated through the fiscal year without a RAN at that level.

Using decade‑long figures for unassigned fund balance and models of how several tax‑rate scenarios would affect reserves, Saxs showed that maintaining the recommended 20% would place Northumberland County in line with peer localities and preserve flexibility for capital and operating needs. He also presented a sequencing proposal for any year‑end surpluses: allocate 50% of surplus to the budget‑stabilization fund until it reaches 2%, then allow the board to direct remaining funds toward capital or reserve bolstering.

On timing, Saxs said the county should aim to reach the 20% target as soon as feasible and suggested "not to exceed a three‑year time period" as a practical goal while acknowledging political and budgetary constraints. He urged the board to "adopt a structurally balanced budget" so recurring operating costs are covered by recurring revenues after reassessment adjustments.

Board members asked clarifying questions about the 20% threshold and whether smaller buffers could suffice under twice‑a‑year tax collections; Davenport answered that with the current single annual property‑tax schedule and about 60% of revenue derived from property taxes, the 20% level provides reliable protection. After the discussion a board member moved to begin the process of drafting a formal fund‑balance policy and to work with Davenport to prepare language for board consideration; the board agreed to start that work.

Why it matters: establishing a minimum reserve and a budget‑stabilization bucket would change how the county plans for cash flow, emergencies and capital needs. The board will consider formal policy language after the FY27 budget process and could use the recommended tax‑rate scenarios as part of that deliberation.