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Davenport: Johnston County’s triple‑A credit rating affirmed; fund balance, debt plans discussed
Summary
Financial advisers told the commissioners Johnston County has top‑tier credit ratings, a fund balance well above typical AAA peers, and capacity for planned school and utility borrowing; advisers urged cautious, multi‑year budgeting and recommended lowering a legacy debt ratio policy to better match current finances.
Financial advisers from Davenport & Company told the Johnston County Board of Commissioners that the county’s credit ratings remain at the highest level after recent briefings with Moody’s and Standard & Poor’s. Kyle Wags and Austin Sachs summarized recent financing activity, current debt profiles and recommended guardrails for future borrowing.
What the board learned: Davenport reported that the county closed a $100 million general‑obligation bond sale at about a 3.4% fixed interest rate for 20 years. The advisers said a $30 million limited‑obligation bond (LOB) for community college and school projects is expected on the market within weeks pending Local Government Commission approval.
Ratings and reserves: Davenport noted Johnston County now has multiple AAA ratings and that Moody’s and S&P cited the county’s robust economic growth, consistently positive operating results and an ample fund balance. The advisers reported the county’s general‑fund unassigned fund balance is high — roughly 65–70% of annual general‑fund revenues — well above AAA medians. They suggested the county could prudently target a somewhat lower formal fund‑balance policy (Davenport suggested 40–50% as a working range) while still preserving fiscal flexibility.
Assessed value growth and debt capacity: County staff and advisers said the county’s total assessed value has roughly doubled over the past decade (from about $15 billion to $30 billion), with compound annual growth near 7–8%. Davenport showed two policy ratios: debt as a share of assessed value (about 1.2% after the recent bond) and debt service as a share of annual expenditures (about 11%). The county’s formal policy caps are 4% of assessed value and 20% of expenditures; Davenport recommended considering reducing the assessed‑value cap toward 3% to align with triple‑A peers.
Utility financing: The advisers briefed the board on the county’s utility (water/wastewater) finances, which are run as an enterprise fund and currently carry double‑A ratings. Utility debt is longer‑dated (typical 30‑year schedules) and includes low‑interest state loans and revenue bonds. Advisers said utility investments should be aligned with a regional approach to water supply and urged continued coordination with neighboring jurisdictions.
What the board asked: Commissioners questioned the advisability of lowering the assessed‑value policy and whether longer debt terms (25–30 years) would ever be appropriate for non‑utility projects. Advisers said longer terms are usually reserved for utility assets with very long useful lives; general‑government projects typically follow 20‑year schedules in the county’s plan.
Ending: Davenport recommended the board continue to fund multi‑year capital plans, review debt affordability annually and coordinate utility planning and regional partnerships before authorizing additional large borrowings.
