Landowner challenges inter-fund transfers

SANDPOINT — A Sagle landowner is asking a district judge to shut down Bonner County’s practice of using inter-fund transfers to cover funding shortfalls on capital improvement and other projects.

Lou Goodness contends borrowing funds from one department to cover costs in another is against Idaho law and the Idaho Constitution.

“Giving commissioners unilateral authority to transfer funds after the final budget is adopted negates the entire budgeting process,” Goodness said in court documents filed on Tuesday.

Goodness filed the documents in connection with the county’s two-pronged petition for judicial confirmation of financing options for completing the embattled remodel of the Bonner County Courthouse.

The county moved last month for a 1st District judge to confirm a plan to issue up to $1.5 million in general obligation bonds to complete the remodel. It is also asking the court to rule on whether a long-standing practice of borrowing between funds is lawful, which could serve as an alternative to issuing bonds.

County officials have been advised over the years that the inter-fund transfers are allowable, but commissioners said they have never been able get anybody to put that in writing.

Inter-fund transfers, which are paid back over time with interest, have already been used to bankroll the startup of the county’s Ambulance District, to help defray the cost of the new juvenile detention center and square up other budget shortfalls over the years.

County commissioners say the court’s ruling on inter-fund transfers could have far-reaching impacts because they are utilized by many other counties in Idaho.

The county is seeking judicial confirmation on the general obligation bonds because the state’s constitution bars indebtedness beyond a single fiscal year. The county argues the remodel should be exempt from the constitutional provision because a courthouse is an ordinary and necessary expense.

Goodness, who helped persuade a district judge in 2008 that a lease-to-purchase financing plan to build a new juvenile lockup was unconstitutional, said in court documents he does not oppose completion of the courthouse remodel or object to judicial confirmation of general obligation bonds to finish the project.

Goodness filed documents pro se which argue that state law forbids the transfer or diversion of operative funds and the county has offered no legal basis to support the practice. The filings also seek information on past inter-fund transfers and courthouse remodel financing.

A hearing on the county’s petition for judicial confirmation is set for Oct. 18 in Kootenai County, according to Stephanie Bonney, the county’s legal counsel on the petition.

The petition is being heard in Coeur d’Alene because judges in Bonner County disqualified themselves from taking up the matter to avoid the appearance of a conflict of interest.