Walker County's financial turnaround over the past three years reached its pinnacle Wednesday when it locked in the interest rate on a $14.7 million bond refinancing that will save county taxpayers more than $3.9 million by nearly cutting the county's borrowing rate in half.
The savings exceeded expectations after the stock market closed with its worst day of the year Monday when concerns over trade with China pushed the market down. That sent nervous investors heading for the safer securities like municipal bonds and other government-backed debt on Tuesday, said Trey Monroe, the Atlanta underwriter for the bond issue. The county had set previously set Tuesday as the day to market the bonds.
"People ran for treasuries," said Monroe, managing director of Stifel Public Finance. "We had some good luck on this one."
Walker County's lone commissioner, Shannon Whitfield, held a called meeting Wednesday after the Walker County Development Authority approved the bond documents locking in a 2.64 percent interest rate on the 2019 bonds. The previous bonds carried a 5.2 percent interest rate.
Whitfield said a restored county credit rating of A1 was integral in the refinancing, which cuts four and a half years off the original term of the 2015 bonds. The 1 mill assessed on property tax bills in 2015 to pay for the 2015 bonds will end five years earlier than planned, Whitfield said. The county increased its monthly payment and can pay off the new bonds early after five years.
"We could have done a lot of different things with the money," said Whitfield. "The whole goal in my administration has been to eliminate debt soon as possible."
The 2015 bonds issued by the development authority were unrated and an indication of where county finances were at the time, Monroe said. He said the bonds sold Tuesday carried an A1 rating from Moody's Investor Service and showed the bond market's confidence in actions taken since Whitfield took office in January 2017.
"I have been doing this for 20 years," said Monroe, "and I do not think I have ever seen a turnaround happen as quickly as it did here."
Moody's said the upgraded bond rating reflected "the county's recovering financial position following years of structural imbalances that substantially eroded the county's reserves and liquidity."
Whitfield ran for office in 2016 pledging to turn the county's finances around. He inherited a 2016 balance sheet $7.5 million in the red and total debt of $69.9 million. Whitfield used tax anticipation notes for $8 million in 2017 and $1 million in 2018 to provide cash flow needed to meet the $1.1 million monthly payroll.
The commissioner raised property taxes by 2 mills to generate $2.4 million in new revenue, restructured the fire fee and increased the tipping fee at the county landfill. He also enacted a three-year, $125 public health tax to repay the county's debt to Erlanger Health System for its bailout of what was formerly Hutcheson Medical Center. Whitfield announced in the spring that he would end the health tax a year earlier due to higher than anticipated revenues.
"The taxpayers of Walker County are the real winners today," said Whitfield. "Together, we've worked hard to restore our county's credibility by targeting debt reduction. The fruits of that labor are starting to be realized."