There are several reasons, according to Coconino County Treasurer Siri Muranee.

A harsh winter with devastating wildfires, severe flooding, and near-record snowfall has damaged the county’s infrastructure, creating the need for mitigation plans and diversion of floodwaters, and driving up the budget.

“Compared to last year, the total budget has increased. The flood control district is the main player. Last year, when we set the budget, it was before the fires and floods,” Maleney said. “Last year he had a flood control district budget of $10 million. This year it is the same as the baseline budget of $83 million. is filled by

The county expects significant federal funding not only for flood protection, but also for many individual departments and special districts. Funds awarded and expected must be budgeted and approved to be disbursed as they are effectively credited to the county bank account.

“The undistributed grants are really replacements that we have set up for funds that we are applying for or that we believe will be received soon,” Maleney said. “We are very well positioned for many projects to qualify for things like broadband access. rice field.”

When county residents pay property taxes, sales taxes, and other fees to the county, those money usually end up in the General Fund. Funding for this General Fund can be increased through federal grants, but ultimately counties have statutory spending limits.

“As an organization, we have historically been pay-as-you-go. That has been the way we do business for a very long time,” explained Coconino County Manager Steve Peru. “At the same time, needs continue to accumulate, especially for facilities and roads. have spending limits that we must operate within, which is what our process looks like in terms of how we proceed with the delivery of public services such as roads while managing spending limits. is another part of

When weather emergencies or general wear and tear require infrastructure or public works equipment to be repaired or replaced, counties sometimes have to think of more than they can accomplish with the funds they have on hand, he said. Peru explained.

As such, the Coconino County Board of Supervisors this week resolved to take on long-term debt to meet the region’s capital improvement needs.

“People want to take advantage of taxes, property taxes, etc., so we are trying to balance the provision of services. No,” Peru said.

The county has an $80 million loan agreement with Capital One. The funds will be used only for capital improvements such as roads, infrastructure, transportation, public safety, county facilities and building acquisition, maintenance and improvements.

One of the projects funded by this loan scheme is the restoration of Slayton Ranch Road.

“This year, one of our drainage systems suffered from meltwater failure, disrupting roads and impacting community movements,” said Andy Bartelsen, deputy manager of the county. “We have many needs in our communities and many weather effects create those needs and create emergencies. Many of the limitations are local funding and local capacity to meet the demands of these emergencies.”

Many of the repairs, projects and purchases made with this $80 million will last much longer than a single year, so in some ways it doesn’t make sense to imagine them as annual budget items, Maleney said. rice field.

Loans allow the county to spread the costs of projects that last a year or more over a longer period of time.

“When you think about capital expenditures, your spending limit is how much you can spend in a year. “We are doing it,” said Maleney. From an accounting perspective, you are purchasing an asset with a useful life of multiple years. It becomes a biased situation. For example, if he uses the money to buy a new road, he must recognize it as an annual expense, and there is a limit to how much he can spend in a year. Year.

“In fact, when you look at this from a depreciation perspective, if you were to expense it in traditional accounting terms, it would be expensed over multiple years. It allows us to treat spending a little differently, moving from annual spending to spending aligned with the life of the asset.”

The nature of financing transactions is also unique.

“Usually when you look at debt repayment, you are given a bond schedule and you have to pay principal and interest on that schedule. Yes, and we are not bound by that schedule, other than the maximum amount of time it takes to repay the principal portion,” Mr Maleney said. 100% of the principal is repaid on the 31st, interest is suspended from the date of issuance, and splitting is also possible. If you withdraw 25%, you could pay off 25% of that balance quarterly, but how do you minimize your total interest costs? “

Before approving the creation of long-term debt, the Coconino County Board of Supervisors held a week-long public comment period. They did not receive public comment. Action was passed to accept the deal and secure the funds needed to start the county’s capital projects by the end of the year.

“The funding we put together will allow us to execute all these projects and buy investments because the other part that is happening in terms of capital spending is increasing every year.” Peru said. “Our ability to push these projects to the max and complete some of the capital purchases this year is actually something we want to do pretty quickly because of the inflation everyone is experiencing relative to capital. That’s what I’m thinking.”

Next week, the oversight board will review the final budget proposal and consider its adoption.