Spokane Sitting On $14 Million Trash-Only Fund As Streets Go Unrepaired, Auditor Examines How Money Is Handled

The city of Spokane asked taxpayers for $37 million to repair streets at a time when it still hasn’t decided what to do with $14 million sitting in an unusual city fund.

The little-known pot of money can only be spent on garbage-related business - not potholes - but the fund is getting new scrutiny after four years without a clear purpose or destination.

The state auditor and attorney general are now examining the fund and how the money is handled.

“We will take a look at it,” said state Auditor Brian Sonntag. “We really have to find out what the fund is, and see whether there are any special requirements.”

The review may have been triggered by Spokane resident Dick Adams, who recently asked the auditor’s office what it knew about the money.

Adams, who opposed the road-improvement bond measure, asserts the city shouldn’t claim it’s broke when it has big-money reserves, such as the $14 million fund.

“It’s just another example of the city hoodwinking the public,” he said. “We’re talking about a lot of dollars there. What’s it sitting there for? We’re not in the banking business.”

The fund was created four years ago when the city settled with an insurance company that bore some responsibility for the Superfund cleanup costs associated with closing the North Side landfill.

The money can be invested, or loaned to other city departments, a city accountant said, but can’t be spent on anything but garbage-related functions, such as buying new trucks or maintaining landfills.

Both Sonntag and city officials stressed the state oversight doesn’t reflect a suspicion the city is doing something wrong.

“This is our year to be audited anyway,” said Dennis Hein, city solid waste management director.

Hein said the money is still earmarked for its original intentions - a loan to help build a new operations complex to maintain city vehicles.

If so, the $14 million would be loaned to another city department to build the complex and repaid through maintenance fees charged to other city departments.

Construction on the maintenance shop, proposed for North Foothill and Hamilton, should begin within two years, Hein speculated.

“I think ground will be broken in the spring of 1998,” he said.

Mayor Jack Geraghty said the City Council hasn’t approved anything yet.”It will be on our agenda for 1997,” he said.

Geraghty also said the money could go toward financing automated trash pickups, or to cover future landfill closure costs.

“As far as I know, it’s been managed properly,” Geraghty said of the fund.

But he added, “It shouldn’t just be sitting there earning interest.”

The money was invested and has gathered interest for four years, growing from $11.7 million to $13.9 million.

Spending critic Adams also suggested most citizens, and possibly City Council members, are unaware the fund even exists.

“I just can’t believe that one of the council people hasn’t asked (about it) during budget debates the past few years,” he said.

Hein said the City Council has always been well-informed on the issue, but a review of the 40-page solid waste budget he presented to the council last year showed no mention of the money - the city’s largest reserve fund.

That was because the budget presentation deals with likely expenditures in 1996, and that there were no plans to spend any of the money this year.

Eric Larson, accountant for the solid waste department, said the city also has the option of using the money to pay off a $11.5 million debt for the closure of the North Side landfill.

Larson said some people misunderstand the unusual insurance-settlement fund.

“People see the money and they say, ‘you should be able to do anything you want with that.’ Well, we can’t.”

The city streets department has borrowed and repaid more than $1 million in recent years from the solid waste department.

But streets officials didn’t try to get a big loan from the city’s flushest department before attempting to persuade voters to spend $37 million on street repairs.

“We’d have no way of paying it back,” said Brad Blegen, city construction services director.

, DataTimes