Reserve funds, debt hot topics at budget meeting

A public budget meeting held at City Hall Tuesday evening was, for the most part, frustrating for some.

A public budget meeting held at City Hall Tuesday evening was, for the most part, frustrating for some.

After three hours, the meeting was adjourned, and only half the agenda had been realized.

Normally budget meetings are held in camera, but in an attempt to be more transparent council has embarked on having its budget meetings open to the public.

“It was frustrating,” said Mayor Kerry Cook afterwards. “People talk a lot longer at these meetings than they do when we meet behind closed doors.”

Council did, however, pass a number of recommendations regarding revenues and expenditures.

The first recommendation authorized a comprehensive review of current fees and charges. Council asked staff to prepare an analysis of revenues and expenses with regards to fees and charges, and make comparisons to similar communities.

Annually the City receives around $500,000 in gaming funds and $400,000 through a small community protection grant. Normally those funds go into general funds so they can be used where needed, rather than being designated to a specific budget item.

After a lengthy discussion, council decided to leave the grants in general funds. Everyone voted in favour of the recommendation, except for Coun. Laurie Walters who was opposed, arguing that by allocating those funds it gives council an opportunity to look at the needs of the community.

Whether to raise the amount of money annually going into reserves sparked debate, with Cook stating she would like to see $3 million in reserves at the end of five years.

“By that we are saying up front that we currently want some money and a plan in place so that we’re not in the situation we’re in today. The time is ripe to bite the bullet and make some tough decisions,” Cook said, adding it’s important enough to start thinking about committing to an infrastructure capital reserve fund. In the end, however, council passed a recommendation to maintain the existing $400,000 in the budget for reserves and tasked staff to provide some scenarios about what it would cost to put more money into reserves.

When it came to utility rates, council requested staff to provide a report. Director of finance Pat Higgins outlined the city’s debt level, explaining that between principle and interest the cost of servicing the debt is $1.8 million, although the city may not be paying that full amount at all times. The city is allowed to access a debt servicing fee of $5.5 million, but at this point has chosen not to go that high.

Coun. Sue Zacharias asked if borrowing money when interest rates are low might be a good thing to do in order to pay down the debts faster, but Higgins explained that with debentures there isn’t always the opportunity to pay debts off sooner.

Council passed a recommendation  that staff develop a debt policy and when it comes to service levels that there be no increase.

Toward the end of the meeting, staff began outlining the proposed capital and operating budgets, but chief administrative officer Brian Carruthers reminded council they only contained pieces of the budgets.

“They haven’t been pulled together yet because we haven’t received our final financials. We’re presenting what the budget is looking like, but nothing’s finalized,” Carruthers said.

Higgins told council considering all the basic operations and capital, the city would need just over $11.7 million in additional revenue to balance the budget.

“We’re presenting the budgets now to council so that you can give us direction to put together a plan whether to raise taxes, reduce costs, or transfer surpluses,” she explained.

The meeting ended before the agenda reached the point set aside for public comment.

While one of the seven people in attendance from the public left before the meeting was completed, a few remained to make comments one-on-one.

One person told Cook he can’t see the city being able to afford $600,000 a year toward a capital infrastructure reserve fund because it would mean a six per cent tax increase.

Cook only wants a two to three per cent tax increase and is prepared to make cuts.

“How are we ever going to get out of the cycle? I want to make sure that we have a long-term plan,” Cook said.

Higgins said as difficult as the evening was, it was important for council to give staff direction on where the city wants to be in five years.

“Putting in your annual budget is one thing, but you need to look at the whole picture and have those policies in place,” Higgins said.

Frustration was also voiced by Peter Bowman, who ran for council in the last election.

“The five-year plan is very important,” he said. “It can’t be disregarded but the budget was why I was here. I want to find out where our money is going. Why are we X amount of dollars in debt and why are we servicing our debt at only $1.8 million when we could be up to $5.5 million? These are questions I wanted answered and some of these concerns weren’t here tonight.”

Bowman is specifically concerned about the $19 million debt and how that’s going to be paid back and the capital project wish list, which he described as an expensive endeavor.

“How are we going to pay for that? Are there going to be tax increases?

“We can’t be naive to the fact that if we want to move forward as a city there’s going to be some kind of tax increase. I’m not against a small tax increase as long as those funds generated from it go toward servicing our long-term debt,” Bowman said.

The next meeting is scheduled for Feb. 14 at 7 p.m. and all budget packages are being made available on the city’s website beforehand.

There will be more opportunities for public input in March before the final budget is adopted in mid-April.