AG declares inter-fund loans illegal

SANDPOINT — In a stance that could have implications throughout the state, the Idaho Attorney General’s Office has declared that certain inter-fund transfers are contrary to state law.

SANDPOINT — In a stance that could have implications throughout the state, the Idaho Attorney General’s Office has declared that certain inter-fund transfers are contrary to state law.

The question has vexed Bonner County officials for the better part of year, with some asserting that it’s entirely lawful and de rigueur among some counties in the state. Commission Mike Nielsen and the county’s bond counsel countered that it is strictly forbidden under Idaho law.

The county asked the AG’s office in January whether it had the legal authority to borrow funds for its general fund from dedicated non-general road and bridge or solid waste funds.

The answer?

No dice.

“Absent a situation to which specific statutory exclusion applies, amounts in county road and bridge and county solid waste funds fall under the prohibition against interfund transfers found in Idaho Code,” Deputy Attorney George Brown said in a March 18 response to county officials.

Bonner County borrowed $3.1 million from its solid waste fund to finance its new juvenile detention center and the county courthouse root canal. The loans are being paid back over a 15-year period with interest rates of 0.20 and 0.30 percent.

The loans were openly made and conducted after being vetted by the county’s legal counsel.

So what now?

“That is my question, too,” said county Commission Chairman Cary Kelly.

Kelly said the Bonner County Prosecuting Attorney’s Office is reviewing the deputy AG’s opinion and is slated to consult with the board next week.

Nielsen argues the loans should not be repaid because they were done improperly.

“If you can understand the English language, you can’t come to any other conclusion,” said Nielsen.

Nielsen further asserts that paying them back would “double dip” taxpayers. Not paying them back would also eliminate approximately half of the $6 million in debt the county racked up overhauling the courthouse.

Kelly said either course of action is problematic.

“It seems like whatever we do, it’s not a perfect solution because we’re going to violate something,” said Kelly.

Improperly made loans are void, although the county borrowed the money with good intentions and a pledge to pay them back.

Nielsen has been the lone elected official in Bonner County to voice opposition to the inter-fund transfers and said he’s been vilified for his position.

“It’s the way they’ve been doing business, but it doesn’t make it right,” said Nielsen.

“That’s how this county got $6 million in debt and the voters didn’t approve it.”