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County finance staff outline plan to move $15.5M loan from general fund to treasurer and create $15M stability fund
Summary
County staff explained a plan to resolve a long‑term $15.5 million loan initially made from the general fund to the Flood Control District by repaying the general fund and replacing the loan with an authorized treasury loan; staff also described a $15 million one‑time stability fund to cushion potential federal funding shortfalls.
Coconino County finance staff briefed the Board of Supervisors on a recommended restructuring of a previously issued $15.5 million loan to the Flood Control District and on a proposed $15 million one‑time “stability fund” intended to provide budget runway in the face of federal funding uncertainty.
Auditors and legal staff determined the general fund did not have explicit statutory authority to hold a long‑term receivable structured as a long‑term loan to the Flood Control District. County staff described a mechanism to resolve the legal issue: Flood Control would repay the general fund and then borrow the equivalent amount from the county treasurer (a statutory mechanism available to special districts). County staff said the swap would have no net impact on the Flood Control District’s fund balance or operations, but it would shift the loan’s recorded creditor from the general fund to the treasurer.
Separately, county fiscal staff proposed a $15 million onetime stability fund (separate from the ongoing general fund reserve) to provide “runway” if federal or state funds are delayed or cut. Staff explained the difference between balance‑sheet accounting, budget forecasting and cash management: the loan move is primarily a cash/balance‑sheet transaction and does not change the county’s budgeted fund balance. The stability fund would be held as onetime resources to bridge timing differences or to provide a planned off‑ramp in the event of longer‑term federal funding reductions; staff emphasized that using the stability fund would not automatically replace recurring revenue if federal funds were permanently lost.
Supervisors asked clarifying questions about how the loan swap would be reflected on the county books and how the stability fund would be used, and staff walked through balance sheet examples to show that repaying the general fund would convert a receivable into cash and that borrowing from the treasurer would place the liability with the treasurer rather than the general fund. No final board vote on the stability fund was taken that day; staff said the stability fund recommendation would be included in FY26 budget materials and decisions would be made as part of that process.
