Essex County financial advisers say reserves strong; model shows capacity for roughly $25–26M in new debt

The Essex County Board of Supervisors heard a briefing Feb. 10 from financial advisers at Davenport that mapped the county's reserves and debt capacity and laid out assumptions for future borrowing.

Davenport told the board the county is not rated by the national credit rating agencies and therefore has not sought an outside rating, but the presentation compared Essex’s metrics with rated peers. As of 2025, Davenport said, the county’s unaudited unassigned fund balance stood at $11,100,000 and the county’s policy sets a minimum reserve of 15% of expenditures with an 18% target.

Those reserves and current debt service levels drive the consultant’s affordability model. Davenport used a conservative planning assumption of 20-year debt at a 5% interest rate and the budgeted debt-service amounts in the 2026 budget as the baseline. Under those assumptions, the analysis showed roughly $25–26 million in incremental borrowing capacity over the next six to seven years if the board maintains the current budgeted debt-service levels and does not reduce the amount set aside for debt service.

Ben of Davenport said, “The county is not currently rated by any of the national credit rating agencies,” and emphasized the model’s sensitivity to revenues and policy choices. He also noted, “As of 2025, that unaudited number is 11,100,000.” Board members pressed Davenport on market-rate assumptions (Davenport described 5% as conservative, with current market rates nearer 4% for comparable 20-year financings) and on the difference between ‘‘capacity’’ under policy ratios and true affordability if revenues decline.

Davenport also reviewed the county’s tax-supported debt portfolio, reporting $9,843,000 outstanding as of June 30, 2025 and a 10-year payout ratio of about 100% (the county’s policy target is 55%). The firm said most current loans are fixed-rate and either near maturity or not prepayable, limiting near-term refinancing opportunities.

Board members raised revenue-risk scenarios: the consultant cautioned that federal or state revenue cuts that reduce budgeted receipts would lower the unassigned fund balance and could constrain the county’s ability to absorb new debt without raising taxes or using reserves. Davenport reiterated it can run customized project-level scenarios and provide refinements, and offered to model specific capital projects for the board as staff identifies priorities.

The board thanked Davenport and directed staff to continue capital-planning work ahead of the upcoming budget schedule.