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County seeks loan from Land Bank to bail out Solid Waste, Public Works fund to help roads
San Juan County's financial team wants to borrow money from the Land Bank to bail out the Public Works Department's Solid Waste Division.
County officials are also banking on a loan for up to $800,000 from Public Works' Equipment Rental and Revolving Fund to keep the Road Fund in the black and to help pay for whatever construction or maintenance projects the Road Fund would be unable to finance over the next 15 months.
Roads and Solid Waste are not alone.
Auditor Milene Henley last week told the County Council that of 23 separate funds maintained by the county, there are six that are either in the red, including Solid Waste and the county's Capital Improvement Account, or, in the case of the Road Fund, are likely to be by the end of the year. She cited a recent reprimand by the State Auditor's office in pressing the council to endorse a plan which relies largely on "interfund loans" to erase the "negative balances" of those cash-strapped funds by the end of the year.
"Spending more than you have is a bad thing and we need to get to a place where we're not doing that anymore," she said.
It's the second time in two years the council has been forced to consider borrowing money from the Land Bank's Stewardship Fund — an endowment and investment account that in 2009 totaled roughly $3.5 million — to cover the bottom line of an unrelated department. The council backed away at that time from borrowing from that fund to pay for a list of stormwater projects, and opted instead to rely on the Road Fund as its financial backstop.
In a split decision, the borrowing plan presented by the County Finance Committee, which consists of the administrator, auditor and treasurer, failed to gain the council's approval Sept. 21. Councilman Gene Knapp, East Orcas, a former Land Bank commissioner, objected to pursuing the stewardship fund as a loan source and abstained from voting on the committee's plan.
Knapp noted that the prosecuting attorney has yet to determine whether the use of Land Bank revenue for anything other than for the acquisition, preservation or maintenance of conservation land would be legal.
Though they agreed that the committee's financial plan has merit, Council members Bob Myhr, Lopez/Shaw, and Howie Rosenfeld, Friday Harbor, voted against it. Rosenfeld, citing the uncertainty that surrounds the expense side of the Solid Waste Division, labeled his objection as a "protest vote." Myhr said he saw no reason at this time to vote on the committee's financing strategy, given the uncertainty over a loan from the Land Bank.
Council Chairman Richard Fralick, Orcas West, and Councilwoman Lovel Pratt, San Juan South, voted for the plan, which, in a 2-2-1 decision, failed to gain a sufficient number of votes. (Councilman Rich Peterson was absent).
In addition to bolstering Solid Waste and Roads, the committee's financing plan calls for borrowing up to $100,000 from the Public Facilities Improvement Fund, also know as the 2260 fund, to supplement the Capital Improvement Fund; and for restructuring or building bigger reserves in the Emergency Management Fund, the Lodging Tax Fund and the Information Services Department in order to avoid seasonal fluctuations in revenue and expenses that drive those accounts periodically into the red.
Though it failed to gain the council's direct support, Henley said the finance committee will continue to work out the details of the plan, such as identifying the means that any interfund loan would be repaid and negotiating with Land Bank officials, and then present the council with a recommendation based on that borrowing plan in the near future.
"I think it's kind of sad that you can't come to an agreement on something as simple as this," she said. "But it doesn't matter ... we're going to do it anyway."