Johnston County adds residents rapidly; county finance officials warn Medicaid ‘hold harmless’ payments can shrink

Denise Canada, a policy analyst with the North Carolina Association of County Commissioners, told the Johnston County Board of Commissioners that new Census estimates put the county’s population at about 250,000 and that about 13% of that total moved to the county since July 2020. "You have 250,000 residents in Johnston County. Thirteen percent of those people have moved here just since July 2020," Canada said during the board's strategic planning session.

That growth has pushed the county into a faster-growing peer group: Canada said recent data put Johnston County among the top 10 fastest-growing U.S. counties in its size tier and in the top 100 nationally on percentage growth. She told the board the county added roughly 7,100 residents in 2023 and about 7,400 in 2024 — roughly a 3.1% annual growth rate. "So that's roughly 20 people a day," a commissioner noted aloud.

Why it matters: Fast population growth can expand the tax base and sales-tax receipts but also drives recurring costs for schools, roads and public safety. Canada cautioned the board that sales tax is the most volatile revenue source and should be budgeted conservatively as the county moves into another revaluation cycle.

Household and workforce signals: Canada said the county’s workforce shows above-average educational attainment in some measures but also noted mixed indicators. She said a sizeable share of households have postsecondary credentials and that the county’s unemployment rate has generally tracked below the statewide average. On where residents work, Canada showed that roughly 70–77% of employed residents work outside Johnston County, with Wake County as the largest single destination — a pattern commissioners called a classic “bedroom community” dynamic.

Sales tax and online sales: Canada pointed to post‑2020 shifts in consumer behavior and the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair as drivers of higher sales tax collections from online purchases. She described large month‑to‑month swings during the pandemic and then a return toward more normal year‑over‑year variation.

Medicaid “swap” and hold‑harmless payments: Canada walked the board through a long‑running state‑level arrangement she called the 2007 Medicaid “swap.” Under that legislation the state assumed the counties’ prior 15% share of state Medicaid costs and counties gave up a half‑cent of local sales tax in exchange. The state created a county Medicaid hold‑harmless payment that partially replaces the lost local sales tax when Medicaid grants or expenditures differ from the sales‑tax amount. Canada said the hold‑harmless payment grows or shrinks depending on state Medicaid spending and sales‑tax revenue: "That difference where I've drawn the arrow, that's a Medicaid hold harmless payment that you receive every year."

County finance staff told the board the most recent hold‑harmless payment was roughly $7.7 million; they also said the payment had been higher in prior years, around $9.9 million two years earlier. County staff warned that a smaller hold‑harmless payment contributed to an unexpected budget gap the board confronted in the prior year.

What the board asked for: Commissioners asked Canada and staff for more detail about the origin of new residents (state-to-state flows), the age mix of recent migrants, and historical commuting patterns. Canada said she would pursue IRS migration data and follow up with the board.

Ending: The board directed staff to use the presentation’s data as context for the county’s 2026 budget conversation and for long‑range capital planning. Commissioners emphasized the need to budget sales‑tax receipts conservatively and to factor hold‑harmless uncertainty into multi‑year projections.