WilCo To Net Millions In Savings In Paying Down Debt

WILLIAMSON COUNTY, TX — The Williamson County Commissioners Court approved a so-called debt defeasance — essentially a paying down of debt — in the amount of $25 million as part of the county’s fiscal year 2019 budget, officials said Thursday.

The upshot: A savings of $10,104,172 in interest payments, according to county officials. Williamson County issues debt to finance long-term capital projects, such as roads, parks and buildings, with roughly 77 percent of the county’s debt is from voter approved road and park bonds.

Defeasance is a provision in a contract that voids a bond or loan on a balance sheet when the borrower sets aside cash or bonds sufficient enough to service the debt, according to Investopedia. In such a scenario, the borrower sets aside cash to pay off the bonds thus the outstanding debt and cash offset each other on the balance sheet and do not need to be recorded.

“For approximately the past five years, the commissioners court has paid down our debt by allocating funds from the annual budget," Valerie Covey, who represents Precinct 3, said. "By refinancing and paying down debt ahead of schedule, we have saved the taxpayers $115,217,015 in interest payments.”

The Williamson County Commissioners Court allocated $42 million in its FY 2020 budget for debt defeasance, officials noted. “We cannot anticipate the net savings that paying down debt early will produce in the next fiscal year, but it will be in the millions,” Julie Kiley, first assistant county auditor, predicted.

In November 2017, Williamson County’s strong AAA bond rating was reaffirmed by both Fitch Ratings and Standard & Poor’s Ratings Service. To view copies of the county’s financial reports, go to http://wilco.mygovcenter.com/financial-reports.