Consultant says County has ample room to take on new debt

Johnston is borrowing $129 million for a new Clayton High.
But it's debt the County can readily afford, a financial consultant says. 

SMITHFIELD — Johnston County could take on some $530 million in new debt over the next five years.

On the County’s to-do list are a new Clayton High School, $129 million; other school building projects, $197 million; a new home for the Johnston County Department of Social Services, $88 million; and new EMS stations, $20 million.

The good news is that Johnston can easily afford that debt, the County’s financial adviser told County Commissioners on June 1.

For one, Johnston enjoys the highest possible credit ratings, meaning it will borrow money at the lowest possible rates, said Kyle Laux of Davenport & Co. “The County’s two AAA credit ratings were recently reaffirmed,” he noted. 

Just as important for future borrowing, current annual debt payments in Johnston are scheduled to fall from roughly $46 million this year to roughly $6.6 million in 2045.

“That’s a good thing,” Laux said, because it gives Johnston room to borrow more money for future buildings, including more room for the County’s courts.

Finally, a County policy says Johnston will spend no more than 20 cents of every dollar on debt payments. “We’re hovering about 10-12% right now,” Laux noted. “So we have good debt capacity, not unlimited, but good capacity.”

And even with an estimated $530 million in borrowing, the percentage of the County budget devoted to debt payments would never reach 20%. It would climb to 15% in just six years — 2028-2033 — before falling below 10% in 2039. Cash reserves, meanwhile, would fall from 57% this year to 47% in 2031.

The credit-rating agencies have said they would be unlikely to downgrade Johnston’s debt unless cash reserves slipped below 35% of spending. 

“You’re well above that,” Laux told Commissioners.

For their part, Commissioners have said they won’t let reserves fall below 40% of spending. What that means is that for every dollar of County spending, Commissioners plan to have another 40 cents tucked away in savings.

“We’ve let them know that,” Laux said, referring to the rating agencies.

 

 

Page last updated on:  July 14, 2026