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County finance explains transfer of $15.5M flood control loan to treasurer and proposes $15M stability fund to blunt federal funding uncertainty
Summary
Coconino County finance staff told the Board of Supervisors May 13 that a previously recorded $15.5 million general‑fund loan to the Flood Control District needs to be restructured to comply with statutory authority and that staff recommends replacing the general‑fund loan with a treasurer‑administered loan while also creating a $15 million one‑time stability fund to manage federal grant uncertainty.
County finance and legal staff briefed supervisors on May 13 about the legal and accounting mechanics of a prior general‑fund loan of $15,500,000 to the Flood Control District and proposed steps to correct statutory and cash‑management issues without creating a material operating impact on the district.
Staff explained that when the general fund originally advanced cash to the Flood Control District, the county recorded a receivable on the general‑fund balance sheet rather than cash. In preparing a repayment agreement in 2025, county counsel and the district’s counsel concluded the general fund lacked statutory authority to hold a long‑term loan in the form that had been contemplated. To resolve the issue, staff proposed the Flood Control District repay the general fund and then take an equivalent loan from the county treasurer under the statutorily authorized mechanism for treasurer loans — effectively moving the receivable from general‑fund books to a treasurer‑held debt instrument for the district.
A senior county finance official walked the board through the balance‑sheet mechanics: “Assets equal liabilities plus equity,” and explained the reclassification would change the nature of the asset (from receivable to cash) on the county books without changing the county’s fund balance. Staff emphasized the change is largely a cash‑management and accounting reclassification and does not, by itself, change the county’s budgeted available resources.
Separately, county staff proposed a $15,000,000 one‑time “stability fund” to provide runway if federal reimbursements or other grants are delayed or reduced. The manager’s office and finance said the stability fund would be a one‑time set‑aside from existing fund balance (not a recurring recurring tax change) to smooth cash flows and provide time to plan programmatic cuts or reorganizations if federal funding were curtailed. Staff explained the stability fund is not intended to permanently replace recurring federal programs; rather, it would offer a planned off‑ramp and time to transition programs if federal revenues decline.
Supervisors asked clarifying questions about whether the $15.5 million transfer creates new spendable cash; staff repeated that the loan reclassification is primarily an accounting/cash‑management transaction and does not create new ongoing budget resources. Supervisors also queried how the stability fund would be drawn down and replenished; staff explained it is an onetime reserve that could be partially replenished if future revenues permit but would not automatically be a recurring revenue source.
Board members directed staff to continue finalizing the mechanics with county counsel, treasurer and the Flood Control District; staff said they would return with the formal documents and timing for implementation.
