Noack proposes $7.1 million in Budget Reductions
SPRING, TX – Precinct 3 Commissioner James Noack is proposing $7.1 million in budget reductions through early payoff of long-term debt. A few weeks ago, Montgomery County Auditor Rakesh Pandey submitted the 2018 Comprehensive Annual Financial Report (CAFR). Through discussions with Mr. Pandey, Commissioner Noack confirmed that there are excess funds in the debt service fund balance and has proposed using that money for a significant cash defeasance.
“This money should go to work for Montgomery County taxpayers, not sit idle in an account,” Commissioner James Noack said.
The commissioner has asked the county’s financial adviser to give a presentation explaining the benefits of this proposal during the April 23 Commissioners Court meeting, when Noack will ask the court to approve the early debt payoff.
After reviewing several options to achieve the desired reduction in debt service requirements, Commissioner Noack is proposing the use of $6,970,602 in the debt service fund balance to purchase a portfolio of eligible securities, which will be deposited into an escrow account. The portfolio will be structured to generate sufficient cash flow in order to pay off the Series 2014A bonds at maturity, including the entire 2020 maturity of $4,855,000 and a portion of the 2021 maturity of $1,800,000. This will result in a $5,097,125 budget reduction for 2020 and a $1,845,000 budget reduction in 2021, in addition to a $167,125 reduction for 2019. This also provides taxpayer savings of $138,648 in interest alone.
Even after using $6,970,602 in “excess” fund balance, the debt service fund balance still will be greater than 15 percent of the county’s debt service requirement, leaving Montgomery County in a strong financial position. This is consistent with Commissioner Noack’s continued efforts to save taxpayers money and reduce the county’s annual budget. In 2017, Noack spearheaded the effort to pass a 20 percent homestead exemption, saving property owners a total of $28 million in taxes. That same year, he worked with county department heads to reduce their budgets by 5 percent, realizing annual budget savings.
Noack previously led the county in early payoff of millions in debt, saving taxpayers $7.4 million in interest.
Source: Cody Grimes, Commissioner James Noack, Montgomery County Precinct 3