Nye County loans itself $5.78 million to shore up reserves

In an effort to shore up the financial reserves used to cover cash flow issues in the county general fund, Nye County is loaning itself $5.78 million.

The money will come from the Local Assistance and Tribal Consistency Fund (LATCF) grant that the county received as part of the American Rescue Plan. Under that program, Nye County was allotted $12 million. Unlike with most federal grants, there is only one restriction on how the money can be spent, with lobbying activities prohibited. Therefore, officials are at liberty to utilize the funding in any other way they see fit.

Nye County commissioners officially green-lighted the temporary interfund loan during the board’s Tuesday, April 2 meeting. Nye County Comptroller Helen Bae provided an explanation of the need for the loan as well as an overview of how quickly the county can pay it back.

“Everyone has that question, how did we get here and what can we do to pay it back within a year?” Bae stated Tuesday morning. “So, this deficit is a result of rising costs and not enough revenue over the period of three fiscal years. We have seen post-COVID rising fuel costs and inflation that has run away, and we continue to see that.”

“What we’re facing here is the result of COVID and inflation,” Nye County Commission Chair Debra Strickland reiterated. “We’re just now realizing it, is all.”

Bae then shifted gears to talk about the cash flow issues the county regularly sees, which are a result of when certain types of its revenue are received. A large portion of the county’s consolidated taxes, along with its federal Payment in Lieu of Taxes, are received two or three months after the fiscal year comes to a close on June 30. Bae said the county is primed to receive around $9.9 million in fiscal year 2024 revenues over the course of August, September and October. The interfund loan will be used to allow the county to continue operations until that revenue is received.

As to why the cash flow has become a problem now, Bae said the county has been slowly eating away at its reserve, which is far below healthy levels. According to Nye County’s financial policy, the county is supposed to keep a reserve equaling 16.7% of its annual expenditures, enough to cover about two months of operating expenses. At this time, the amount of reserve should be at $8 million. However, fiscal year 2024 started off with only $4 million in reserve.

“And that’s just not enough to cover us for the two to three months we wait toward the end of the year. Our immediate need for this cash is to float us until December,” Bae stated. “When we receive that last tranche of revenues, we can actually pay that loan back starting in January. We would immediately pay back that $5.78 million in January, possibly earlier.”

Once the interfund loan has been repaid to the LATCF fund, how will the financial reserves be replenished?

Bae said projections for the next fiscal year show a possible $15 million in additional revenues, which can then be used to restore the $8 million reserve.

The Nevada Department of Taxation has released its projections for fiscal year 2025 and Nye County is expected to see around $3.6 million more than in fiscal year 2024.

Bae said the Nye County Sheriff’s Office was able to renegotiate its ICE contract with the U.S. Department of Homeland Security to increase revenue from that contract by 38%, or conservatively, about $900,000.

Indirect revenue is to be collected from grants administration, as well, which was not previously done. “That additional revenue source… will bring us about $500,000 more and that’s conservative,” Bae noted.

An energy conservation project with Siemens Industry, Inc. will also begin to reap its benefit in the next fiscal year, Bae added, to the tune of $486,000 in guaranteed energy savings..

To date, the county has not been properly cost-sharing with the town of Pahrump, something else that will change in fiscal year 2025.

“We have been absorbing the overhead costs and been paying the majority of it out of the (Nye County) general fund without billing it to the town of Pahrump. That became a revelation during budget time. When we’re looking at the division of labor and charge-back, it just hasn’t been happening… That could gain us, on the low end, about $500,000 if we were to fairly allocate overhead costs to the town of Pahrump,” Bae said.

Although not yet approved, the county is also in the process of creating a development agreement with GridLiance as part of that company’s transmission line expansion project. If ultimately approved, that project would bring the county approximately $7 million in personal property taxes and $3 million in sales taxes.

Mining revenues are anticipating an increase next fiscal year, too, and the county is working to offset payroll costs to the general fund from workers’ compensation.

Commissioners also discussed how the remaining LATCF dollars will be allocated during the April 2 meeting.

Details on which projects will be funded and in what amount will be included in an upcoming edition of the Pahrump Valley Times.

Contact reporter Robin Hebrock at rhebrock@pvtimes.com