Johnson County is planning to be debt-free by 2028.
Currently, the county has six annual payments left, with the final payment due June 2028 on the current bond, which services the money borrowed from 3 previous projects; the construction of the solid waste industrial park; the school bond, which includes: the construction of Roan Creek Elementary, and the expansion at Laurel and Doe Elementary schools, plus the renovation of the existing buildings in the mid-’90s.
The County also paid for the construction of the jail- Sheriff’s department on Honeysuckle. As it stands, there are three years left on the solid waste and school loan and six years left on the jail bond.
Of the 95 counties in Tennessee, not including municipalities and special school districts, there are only about eight counties that are debt free. Johnson County plans to add itself to that list.
According to Federal and State laws, for bonds which the county can not take out internally, the county must go through a securities agent to pursue a bond on the open market. These bonds are often purchased by a large bank such as Regions, which currently holds bonds for $6,214,141.40.
In addition to the annual payment, the county makes two interest payments, one of which is paid in December. Of the existing balance owed, only $258,141.40 of the grand total is interest owed on the bond. This debt-free plan will only include money borrowed externally. Any funds for future plans, such as the $950,000 recently approved to borrow for the renovations on the DCS/DHS building, will be held internally at zero percent interest.
According to Johnson County Accounts and Budgets Director Russel Robinson,” the county only has 1 or 2 years left on the terms of the loan before they can do a recall and refund on the loan and have the option to pay it off in full without any prepayment penalties”.
Robinson explained that in the past, the county has opted to utilize the recall and refund option twice, both times to refinance the loan for a lower interest rate. Both times, the loan was kept on schedule for the original 30-year loan agreement terms. It was not extended so as to keep the county on schedule for a debt-free plan by June 2028.
“We have been very conservative in how we use money," Robinson said,”
Just like its residents, the county is also a consumer affected by an increase at the gas pump or in the grocery store and has to make allowances and adjustments for those increased costs. Such costs include diesel fuel or the purchase of more trash bags.
“It’s a balancing act,” Robinson explained, adding, “when the costs don’t meet the revenue, we have to figure out how to make it work.”
Johnson County is one of the lowest-taxed counties in the state of Tennessee. Of the $1.81 total tax rate, $.13 is distributed to the debt services account to help pay back debt which equates to approximately 8 percent, which is a prime example of how the county is able to afford these projects.
The three major sources of funding come from property taxes, budgeted annual school contributions, and a portion of wheel tax. Of the 8.5 percent sales tax, the state receives 7 percent, while 1.5 percent comes back to the county.
The school system contributes $264,154 for the last 20 years as a portion of their bond debt. And of the $40 wheel tax, $15 of that amount is dedicated to repayment of the debt, making it possible for the county to be responsible borrowers.