Mathews County supervisors spent a large portion of their work session weighing tradeoffs between taking on new debt and drawing from county reserves to cover a $1,227,812.42 shortfall in the schools budget and other capital needs.

The county’s finance staff reported, “the deficit right now is that $1,227,812.42, which is 5.83¢ on the real estate tax,” and outlined the status of interim financing tied to a $5,000,000 Economic Development Administration (EDA) loan. Finance staff said the county has drawn $1,735,899 from the interim financing to cover capital expenditures already spent and that the net amount initially deposited into the county’s account after closing costs was $4,985,219.58.

Why it matters: supervisors said the choice between borrowing and using reserves will affect next year’s tax rate and the county’s fund balance policy. Several supervisors urged avoiding new long‑term debt where possible to limit added debt service and protect the county’s credit position; others cautioned not to reduce the unassigned fund balance below the policy minimum.

Board members discussed specific options. One supervisor outlined a plan to fund $5,000,000 in school repairs over 20 years (noting some school repairs may not have 30‑year lifespans), which would produce about $363,000 in annual debt service if financed over 20 years; combined with the current shortfall that would raise the real estate tax impact toward about 8¢. Another proposal discussed using $2,000,000 from county reserves to fund immediate energy upgrades and other school improvements to lower future operating costs and defer or reduce borrowing.

Supervisors and staff reviewed the interim financing draw schedule and the requirement to spend specified amounts by certain dates; finance staff said the county must draw roughly $3,000,000 in September and complete the remainder by the next March to satisfy the financing terms. Board members noted a current available cash position (fund balance plus an expected VDOT reimbursement) that, by their accounting, could be roughly $6.1 million, but they also stressed policy constraints limiting how much of that balance is available for one‑time uses.

Participants emphasized two constraints: (1) a county unassigned fund balance policy that staff said is 15% of the operating fund—projected at about $5.4 million under the FY26 estimate—and (2) the practical need to maintain steady, predictable debt service for budgeting. Finance staff noted that withdrawing a portion of the fund balance now to begin high‑priority projects could avoid near‑term interest costs while preserving the option to borrow later if market rates fall.

Other budget matters raised included the use of meals tax revenue (several supervisors suggested it might cover school debt service but also said the legal designation of that revenue would need confirmation), questions about prior state funds for school improvements (one supervisor asked for an accounting of $1,200,000 identified as previously granted), and the possibility of a future sales tax or referendum as a revenue source.

Board members asked for more modeling from school officials and the county—projecting staffing, enrollment, and operating cost scenarios for two‑ and five‑year horizons—so the supervisors can assess whether consolidation or other structural changes will be required to sustain both operating and capital needs.

Ending: Supervisors agreed to continue detailed review of FY26 budget projections, debt service schedules and fund balance options, and to request further line‑item detail and financial models from school and county staff before making final decisions on tax rates or major draws from fund balance.