County staff flag likely misapplication of flood-control tax; $2to3M shift to general fund proposed

Doa1a Ana County administrators told the Board of County Commissioners on May 5 that a review of the flood commissions joint powers agreement and enabling statute indicates the commission has been treated as a separate entity in ways that likely exceed what state law allows. Assistant County Manager Steven Lopez said county and outside counsel now consider the flood commission to be a county department under statutes including 4-50-1, 4-50-2 and 10-1-13, and that some uses of flood-tax revenue look incompatible with the statutes limited list of permissible projects.

"We probably are not in complete compliance," Lopez told commissioners, adding that the statute restricts taxation proceeds to the construction and maintenance of physical flood-control structures such as dikes, dams, embankments and ditches. Lopez and budget staff said past practice under a decades-old joint powers agreement had allowed salaries, office rent and operating costs to be charged to the flood-tax fund.

County flood staff and the state auditors special audit prompted a legal re-read of the statute and the JPA. Flood staff described long-standing operations that include floodplain management, a countywide flood-warning network and review of development plans; they said those activities grew under operational assumptions that predated detailed scrutiny.

The immediate budget implication, Lopez said, is that the countys general fund will likely have to absorb staffing and non-structural operating expenses previously paid from the flood tax. Staff estimated that shifting payroll, benefits and some operating costs would increase general-fund expenditures by roughly $2 million to $3 million in the short term. "We need to offload a good chunk of the salaries and benefits and operating expense from the flood commission tax to the general fund," Lopez said.

Flood Commissioner Robert Mihome and flood staff acknowledged the legal ambiguity but urged careful, staged remedies. Mr. Garza, a senior flood staff member, said the flood-warning system and planning work protect lives and property and should continue; he also said the office has accepted the need to develop new accounting and project-tracking practices so that flood-tax spending can be tied back to specific drainage districts.

Commissioners pressed for detail. They asked staff to produce a prioritized list of functions and a five-year plan that separates what is clearly "construction and maintenance of flood-control structures" from related activities (monitoring, compliance review, staff time). Staff also said the county had already pledged some flood-tax revenue as match for large grants (notably $16 million in Water Trust Board funding on the Dragonfly Channel project), and they warned that any statutory or district reallocation will need to protect existing grant obligations.

Next steps included notifying the state auditor (staff said they had already done so), tightening financial controls and tracking to show which flood-tax receipts pay for district-specific work, and asking legal counsel whether an AG opinion or corrective state legislation is required. Lopez told the board that a legislative fix or statutory clarification could take more than one legislative session to enact, so the county must address near-term budget impacts first.

The board did not take final action May 5. Commissioners asked staff for a detailed breakdown of flood commission payroll and operating categories, an estimate of the exact general-fund increase for FY27, and a plan to ensure grants and multi-phase flood projects such as Dragonfly Channel remain on track.