Black Hawk County finance staff outlines fund-balance spenddown, bond plan and limits on using bond proceeds

Black Hawk County staff laid out a multi-year plan Feb. 11 to use part of the county's unassigned fund balance to pay for capital needs the county can no longer finance with general-obligation bonds and to issue a sequence of bond issues for large projects starting in fiscal 2026.

The presentation, given during the board's budget work session, said House File 718 removed a catch-all clause that previously allowed some nonbuilding expenses to be included in bond-funded projects. That change, staff said, means many items the county previously could bond ' notably equipment ' must now be paid from operating funds or reserves.

Why it matters: The finance presentation framed policy choices the board must make this spring. Staff recommended keeping an unassigned fund-balance target in the 40'45 percent range of annual expenditures to preserve flexibility, while using planned bond issues and a modest spenddown of reserves to fund near-term capital needs.

County staff said the audited unassigned fund balance rose in 2024 but that a portion of available cash is already committed to projects the board has approved, including community agency funding, ARPA construction contracts and a $1 million pledge to the Waterloo Sport Court project. Staff listed current commitments of roughly $4.1 million that would reduce reserves if all are expended.

The presenter said the county's five-year capital improvement plan (CIP) shows roughly $6.6 million in projects that staff classified as 'equipment or other costs that bond counsel now says are not eligible for GO bond funding. For fiscal 2025 alone, those non-bond-eligible items total roughly $1.0 million, the presentation said.

To bridge the gap, the staff plan proposes bond issues of about $5 million in fiscal 2026 and 2027 and a larger $6 million issue in fiscal 2028 tied to the Rhodes Building project; staff said it expects some secondary roads funding to cover portions of road-related projects. The presenter said a 10-year amortization produces a flatter debt-service levy and that the initial issue would raise the debt-service levy from about $0.16 to roughly $0.24 per $1,000 of taxable valuation (estimates presented by staff).

Staff cautioned the board about several uncertainties that could affect the plan: future interest-rate movements, possible legislative changes to the tax and bonding rules, and the effect of House File 718's prohibition on using bond proceeds for equipment. The presenter recommended the board keep a reserve large enough to respond to economic downturns, unanticipated mandates, and cyclical revenue swings.

Board members asked about alternatives including cutting community agency funding, moving some capital projects, or pursuing local-option revenue measures. Staff said local-option (sales) tax options and ballot timing would require further study and legal review.

Looking ahead: Staff asked the board for feedback so staff can finalize numbers for the spring budget cycle and, if the board desires, prepare a bond-timing plan and potential ballot language for any referendum items. The presenter emphasized that the plan shown was an illustrative path rather than a firm commitment and that specific authorizations would still come back to the board for approval.

Ending: The board did not make a final decision on the overall plan during the meeting; staff will return with more refined revenue and timing scenarios during upcoming budget sessions.