• Objectives
• Capital Improvement Budget Policies
• Debt Policies
• Revenue Policies
• Investment Policies

This fiscal policy is a statement of the guidelines and goals that will influence and guide the financial management practice of Montgomery County.  A fiscal policy that is adopted, adhered to, and regularly reviewed is recognized as the cornerstone of sound financial management.  Effective fiscal policy:

• Contributes significantly to the County’s ability to insulate itself from fiscal crisis,
• Enhances short term and long term financial credit ability by helping to achieve the highest credit and bond ratings possible,
• Promotes long-term financial stability by establishing clear and consistent guidelines,
• Directs attention to the total financial picture of the County rather than single issue areas,
• Promotes the view of linking long-run financial planning with day to day operations, and
• Provides the Board of Supervisors and the citizens a framework for measuring the fiscal impact of government services against established fiscal parameters and guidelines.

• The County will consider all capital improvements in accordance with an adopted capital improvement program.
• The County will develop a five-year plan for capital improvements and update each annually.
• The County will enact an annual capital budget based on a five-year capital improvement plan.  Future capital expenditures necessitated by changes in population, changes in real estate development, or changes in economic base will be calculated and included in capital budget projections.
• The County will coordinate the development of the capital improvement budget with the development of the County’s operating budget.  Future operating costs associated with new capital improvements will be projected and included in operating budget forecasts.
• The County will use inter-governmental assistance to finance only those capital improvements that are consistent with the capital improvement plan and County priorities, and whose operating and maintenance costs have been included in operating budget forecasts.
• The County will maintain all its assets at a level adequate to protect the County’s capital investment and to minimize future maintenance and replacement costs.
• The County will project its equipment replacement and maintenance needs for the next several years and update this projection each year.  From this projection, a maintenance and replacement schedule will be developed and followed.
• The County will identify the estimated costs and potential funding sources for each capital project proposal before it is submitted for approval.
• The County will attempt to determine the least costly financing method for all new projects.

• The County will confine long-term borrowing to capital improvements or projects that cannot be financed from current revenues except where approved justification is provided.
• When the County finances capital improvements or other projects by issuing bonds or entering into capital leases, it will repay the debt within a period not to exceed the expected useful life of the project.  Target debt ratios will be annually calculated and included in the review of financing trends.
• Net debt as a percentage of estimated market value of taxable property should target 3%, but not exceed 4%.
• The ratio of debt service expenditures as a percent of governmental fund expenditures should target 10%, but not exceed 12%.
• The County recognizes the importance of underlying and overlapping debt in analyzing financial condition.  The County will regularly analyze total indebtedness including underlying and overlapping debt.
• Where feasible, the County will explore the usage of special assessment, revenue, or other self-supporting bonds instead of general obligation bonds.
• The County will retire tax anticipation debt, if any, annually and will retire bond anticipation debt within six months after completion of the project.
• On all general Fund support, debt-financed projects, the County will attempt to make a down payment of at least 5% of total project costs in the aggregate from current resources. 

• The County will establish an emergency reserve to pay for needs caused by unforeseen emergencies, including unanticipated expenditures of a nonrecurring nature, or to meet unexpected small increases in service delivery costs.  This General Contingency will be budgeted at not less than 1.0% of the General Fund.
• Undesignated fund balances at the close of each fiscal year should be at least 8% to 10% of the Total Annual Operating Revenue Budget of the County.  Should the County find it necessary to access these funds in an emergency situation the Undesignated Fund Balance would allowed to fall below the targets described above.  Once the Undesignated Fund Balance drops below the targeted level the County will include enough funds in its next budget to increase the Undesignated Fund Balance so that it meets the targeted level. 

The County Board of Supervisors recognizes that it is the explicit constitutional responsibility of the County Treasurer to invest County funds in accordance with Virginia Law.  It is the desire of the County Board of Supervisors to provide the Treasurer with the most timely information in order to best execute the powers of the Treasurer’s Office.  To that end, the following Investment Polices are intended as a guide for the County Board of Supervisors to facilitate this relationship.

• The County will attempt to provide a cash-flow analysis of all funds on a continuous basis.  Disbursement, collection, and deposit of funds will be scheduled to insure maximum cash availability.
• The County will develop an annual cash-flow budget for County Operations to be reviewed quarterly with the Treasurer.