Copyright 2014 The Deseret News Publishing Co.
Deseret Morning News (Salt Lake City)
TOOELE - One year ago, Tooele County nearly hit rock bottom during what one county commissioner called the "perfect financial storm."
Now, taxpayers are still paying back more than $4.5 million in interfund loans for a major sports complex that was bleeding money.
The interfund loans — or cash loaned from one fund to another — are subject to repayment, but county officials say there was no repayment plan in place at the time the loans were made.
Six weeks after Tooele County Commissioner Shawn Milne took office in 2013, he learned from Treasurer Jeremy Walker that the county would be completely out of cash in two weeks.
"I remember looking up at the others in the room and I said, ... We're bankrupt and we don't even know it,'" Milne said.
One of the biggest recipients of general funds was the county's $20 million sports complex, Deseret Peak, he said.
"It is one of the most diverse recreational facilities in the entire state," Milne said.
The center has the largest surface area pool in Utah. It has baseball and softball fields, a BMX track, an equestrian center, a motocross track and playgrounds. There is a soccer field and a putting green. It also houses the Oquirrh Mountain Mining Museum and the Utah Firefighters Museum.
"It's a wonderful facility," Milne said. "We have a great facility, but we haven't marketed it as such."
Parks and recreation departments are not designed to generate income. Deseret Peak was bringing in about $600,000, but Walker said the county budgeted for annual losses of $950,000.
Walker and Tooele County Auditor Mike Jensen said the complex was actually losing about $2.5 million each year and was being subsidized through general funds.
"It was hemorrhaging," Milne said. "This wasn't just like a good cut on your forearm. This was somebody cut a main arterial and it was bleeding out."
Walker said he began reviewing the county's previous budgets, expenses and revenue when he took office in 2011.
"In 2009, that (subsidizing) practice changed and instead of transferring the money out of the general fund to subsidize the cash loss, there was then borrowing from these restricted funds," he said.
Over four years, the Desert Peak Complex incurred $6.5 million in debt.
"By the time it was all over, there were 10 separate funds that were borrowed against to fund those operating losses over those four years - 2009 to 2012," Walker said.
Some of those funds were borrowed from the roads budget, health department budget, and landfill and transient room taxes.
Instead of cash assets, departments were given "an IOU so that Deseret Peak continued to operate about a $2 million a year loss," Walker said.
Those IOUs, he said, should only be authorized by commissioners. Instead, he said they were authorized by Jensen.
"I think it's an outrage," Walker said.
Race for treasurer
Both Jensen and Walker are in close running for the position of county treasurer, making the interfund debt a hot topic on the political battlefield.
"It's unfortunate that (Walker) had to bring that up at this point in the election cycle in the campaign," Jensen said.
"I do not have authority by statue to make any of these loans," he said. "These loans are done according to the statue, by the commission only. The auditor has no statutory rights to make these loans."
Discrepancies echo through the Tooele County Commission as well.
Colleen Johnson, a commissioner from 2005 to 2012, said she was made aware of the loans.
"Mike Jensen gave us a report every month," she said. "I was aware."
But Commissioner Bruce Clegg, now serving as chairman, said at no point were commissioners aware that Jensen was moving money among restricted funds.
"To my knowledge as a commissioner and since I've been the (chairman), I was never aware of giving him permission to transfer the funds from one resource to another," Clegg said.
Coming out of crisis
The Deseret Peak Complex was closed in 2013 while Tooele County tried to cut costs. The complex is now open, but it's not operating at full capacity.
Milne said the county is managing the facility but not many of the events. The county has also implemented corporate sponsorships that allowed for the pool to reopen.
Milne said Tooele County is in a better cash position this year.
"We've patched the holes in the boat. We've bailed the water out," he said. "We're still bailing out some water."
Jensen and Walker said all the restricted funds have been repaid. Of the $6.5 million owed in interfund loans, Jensen said nearly $2 million has been repaid and the restricted funds were made whole.
Walker said an additional $1 million was added in 2013 to replenish the county's rainy day fund.
"In a few years, we will be back in a situation where we won't be the example of what not to do," Walker said. "We'll be an example of, here's an organization that admitted their flaws, found the right path and are now very healthy and are hopefully setting an example for other organizations how to run a government organization."