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Fire department's debts to Mohave County, bank could be cleared soon
10/22/2013 6:53:00 PM
By Suzanne Adams-Ockrassa
KINGMAN - The Lake Mohave Ranchos Fire District could be solvent and have all of its debts paid off before the end of 2015, according to District Administrator John Flynn.
Currently, "the district is still technically insolvent," Flynn said.
Flynn updated the Mohave County Board of Supervisors on the district's financial situation Monday. The county took over the district and hired Flynn to run it in February after the district fell into financial difficulties and the entire governing board resigned.
The district is using all of the property taxes it collects to pay off a $450,000 line of credit with Wells Fargo, he said.
By state statute, all property tax funds have to go toward paying off that debt. The district has been able to cut that debt down by more than $300,000, he said.
The district is using the revenue generated by its ambulance service to help keep it running, Flynn said, but it's not enough to run the district by itself. The district had to borrow more than $400,000 from the county.
"Without the loans from the county, we wouldn't be able to operate," he said.
Flynn said in order to keep costs down, staffing at the district's two stations was cut to three full-time firefighters. The district is now only responding to calls within its boundaries and some unnecessary medical equipment and two vehicles were sold. The district is considering selling a third vehicle and reducing the size of its ambulance service area, he said.
Flynn said he expects the district to be able to completely pay off the Wells Fargo line of credit by the end of the first half of the 2014 fiscal year and hopes to pay off the debt it owes the county before the end of 2015.
District 3 Supervisor Buster Johnson wondered why someone from the Treasurer's Office didn't say something to the Board or tell the district they couldn't borrow any more money.
District 2 Supervisor Hildy Angius pointed out that it was the current county treasurer who brought the issue to the attention of the Board.
"Isn't there any checks and balances on this?" Johnson asked.
Flynn said fire districts are allowed to take out a line of credit up to 45 percent of their expected revenue. That line of credit is supposed to be paid off by the end of the fiscal year, he said.
But Wells Fargo allowed the district to roll over its credit debt, Flynn said. The district found itself in financial trouble when it bumped up against the credit line limit. It couldn't borrow any more money and it wasn't generating enough revenue to pay the credit line off and operate the district, he said.
Flynn said he didn't know why the bank allowed the district to continue to roll over its debt; perhaps the bank was trying to help the district out.
Johnson asked Flynn if the treasurer's office had loaned money to the fire district.
Flynn said he didn't know.
Gene Hepler, the director of the county's Office of Management and Budget
, Deputy County Civil Attorney Bill Ekstrom said the previous treasurer had issued a warrant for approximately $118,000 to the district.
Warrants are type of loan the county treasurer's office can issue to a taxing district, he said. The "loan" is paid back when the next round of property tax revenue comes in, he said.
"And they can do this without the approval of the Board? I think this is something that needs to be looked at," Johnson said.
Deputy County Civil Attorney Bill
Ekstrom said that the treasurer's office does have the authority to issue warrants, but he would look into the situation.
Johnson asked what was being done to prevent other fire districts from falling into the same money pit.
Flynn said the Arizona Legislature enacted several bills last session that require fire districts to reconcile their books at the end of every month and verify that they have enough cash flow to support operations throughout the year. Districts are also required to notify the county board of supervisors within 10 days of finding out that they don't have enough money to support themselves, he said.
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