Johnston's cash reserves are substantial but beneficial, financial adviser says
Johnston has long collected more money than it spends,
creating a beneficial cash cushion. But as County spending grows,
the gap between revenue and expenses is shrinking.
Since 2012, the County’s cash reserves have grown from $30 million to $230 million.
That’s triple what County policy requires and 50% more than Commissioners’ informal target, prompting some taxpayers to ask why Johnston is saving so much money.
On Jan. 20, a presentation by the County’s financial adviser helped answer that question.
For starters, the County’s robust savings enable Johnston to enjoy the consumer equivalent of a perfect credit score, explained Kyle Laux of Davenport & Co.
“You have two AAA credit ratings — one from Moody’s and one from Standard and Poor’s,” he noted. “Those are the highest possible credit ratings that any local government can have. They make sure that when you need to borrow money, you can do so at the lowest possible interest rates.”
Johnston has earned those excellent credit ratings — and saved millions in interest payments — because lenders are confident the County, with its healthy savings, can repay its debts even in bad economic times.
By policy, Johnston County Government is supposed to keep 20% of spending in savings. Informally, Commissioners want 40%, though currently, the figure is close to 65%. Other AAA counties in North Carolina keep 20-50% in savings.
But Johnston has been intentional in building its cash cushion, Laux said. “Our policy right now is to be at 20%,” he said. “We’re way above that, but that’s on purpose. That’s all part of the planning that you do to make sure … the county remains in as good a shape, if not better, in the future.”
In other words, by building its savings, Johnston can spend some of that money to meet pressing needs and still have enough cash on hand to keep its AAA credit ratings.
The question for Johnston, Laux said, is “how do we strategically use some of those dollars over the next four or five years, knowing you’ve got a lot of capital to take on.”
Those capital projects include a new home for the Johnston County Department of Social Services, more room for the County’s court system, an EMS station, and some $326 million in school buildings, including a new Clayton High School.
For their part, Commissioners plan to use some savings to move those building projects forward while they arrange long-term financing.
Laux said Commissioners were being prudent. “I think what you’re really seeing here is a concerted effort annually, through your budget processes, to make sure you’ve got a plan,” he said. “It gives you the flexibility to put some cash in.”
Commissioner Butch Lawter said he wanted taxpayers to know that the County wasn’t simply hoarding their money. Instead, the plan is to use some savings to help Johnston meet its building needs. “DSS is the first one of that,” he said.
But Lawter said the board would not drive savings below 40% of spending because it would handcuff the County’s ability to meet future needs. “I don’t think we want to hang out at the 20% level because that limits our future ability to take on projects,” he said.
Laux agreed. “We don’t think you need to be in the 65% range in the foreseeable future,” he said. “But you’ve identified a series of very major capital investments as a County.”
He likened dollars from robust savings to a down payment on a house.
“Another reason that you want to have a very strong fund balance … is you’re going to get surprises,” Laux added. “Especially the last five years, inflation has been real in the world of constructing facilities of this type. So that fund balance gives you contingency and flexibility to help guard against some of those surprises in project costs.”
Lenders will be looking at Johnston’s cash on hand, Laux said. “The bank’s going to want to see that you’ve got a good reserve in your savings account,” he said. “If we’re going to go forward with these projects, we want to make sure we can show to the rating agencies we’ve got a very strong fund balance.”
Commissioner Mike Rose said constituents had been asking him about the County’s savings account, and he thanked Laux for his explanation.
“I think this is a great representation of exactly why it is where it is and why it needs to be there,” Rose said. “As these new projects come online, the money is there. We’re being responsible.”
Laux said the savings had put Johnston on solid financial footing. “We’ve got sufficient reserves to continue to be AAA and contingencies against surprises,” he said. “You’re able to allocate some cash toward these projects; you don’t have to borrow for everything.”
Page last updated on: February 13, 2026