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Budget addendum: Lane County agrees to SRS exchange; city uses interfund loans to cover deficit
Summary
Staff told the committee the city pursued a bank loan that was declined and instead secured a $40,000 Secure Rural Schools (SRS) exchange from Lane County (potentially increasing to $68,000) and will use interfund loans—including a proposed $27,000 loan—to cover sewer fund obligations; the proposals leave a structural deficit to be repaid in future years.
City staff presented an addendum to the FY2026–27 budget outlining two funding avenues to address a projected deficit: a bank loan and an exchange of legacy Secure Rural Schools (SRS) funds with Lane County. "The city's loan request was declined due to negative cash flow. Fortunately, Lane County has agreed to exchange the $40,000 the city requires to address the budget deficit," staff said. The county has indicated it may increase the exchange to $68,000 but prefers to perform the exchange in the current fiscal year through an intergovernmental agreement (IGA).
Staff explained the exchange is effectively an accounting arrangement because SRS funds were co‑mingled with highway funds years ago; the county would accept the SRS funds and return unrestricted general funds. That exchange does not cover repayment of an existing interfund loan from the sewer reserve fund; to address that, the proposed approach makes an interfund loan from the City Hall Building Fund to the general fund and then to the sewer fund so the sewer fund can repay the sewer reserve fund. The staff presentation lists a proposed five‑year loan payment of $6,000 in the current year and a proposed 45‑year term at 4% interest for the longer repayment plan.
Committee members asked for clarity and cautioned that the county's willingness is limited by records about how old funds were spent; staff said legal review of an IGA could require additional meetings. Members agreed to proceed with passing the budget while staff pursues the IGA and any required counsel review.
