Monday, April 25, 2011

Municipal Reserves the sequel.

It is with great interest today that I read Councilor Gallants blog regarding the issue of Municipal Reserves. It makes me very excited to see that one councilor is obviously not going to lose focus on this very important issue, my only hope is that the policy for this issue is dealt with a little faster than the advertising policy. It is now been almost six months since that issue was raised at council and the policy is still not in place. I would hope something as important as the “municipal reserve policy” would not be tangled up so long that it would not be in place for the next budget.

Councilor Gallant comments to the use of reserves as a slush fund by previous councils I guess that resonates well with an audience over a couple of latte’s but the truth is a little bit different than that. I did not always agree with some of the previous council’s decisions on infrastructure, but over the last nine years, the $1.9 million that was taken out of reserves was used in combination with various government grants to get us $30 million in Infrastructure projects completed.

But never the less I always was one Councilor (not the only one) to emphasize the importance of building reserves, that’s why last year the majority of Council agreed that it was time to start rebuilding the reserves, which led to a budget that required a $450,000 contribution to the reserve fund. I am happy to hear that thanks to the prudent financial decisions of the majority of that previous council that there appears to be a $350,000 surplus for 2010. Some may not see that as much of an achievement but looking back over the last 10 years most Irwin led councils ran in the red.

Anyway, the issue of reserves how do you know what is enough. Well first thing I do is compare ourselves to other municipalities they can’t all be wrong, where do you find that information Municipal Affairs, their most recent figures to the end of 2008.

Reviewing 108 towns in the province with a population of 441,647, those towns had reserves between them of $474,622,492 or in simple terms $1075 per person, how does the Pass compare to that? $231 per person.

Should plans be in place for reserves? Absolutely (I caught the comment about lack of planning) but anybody who predicted eight years ago that there was going to be a recession in 2007 for a couple of years and that the federal/provincial governments were going to come forth with a stimulus program for municipalities, I want that individual picking numbers for me for Wednesday night.

Also, keep in mind every year previous councils were provided by administration both long term Infrastructure and equipment replacement programs. Did we always get sound advice, well its not that long ago administration was leading down the path of building a new town shop in Coleman that started out as a $300,000 venture, three years later it was up to $1.3 million if the majority of council had not saw fit to put a stop to that you would have no reserves today. The only point of that statement is to state that long-term plans are only as good as the information being provided to you.

Should taxes be raised to build reserves? Previous council managed to place $450,000 into reserves, and create a $350,000 surplus by increasing taxes 3.2% (Including ASFF and Seniors Housing) this year taxes including those outside requisitions went up 2% not a whole lot of difference 1.2% to be exact which in dollar terms is roughly a difference of only $80,000. However, the only money that was placed into reserves was the $100,000 for the lodge, versus the $450,000 put aside last year.

Let us also not lose sight of the requirement to borrow $530,000 to purchase new equipment this year.

Now let us talk about the issue of needs for reserves how much money should be put aside? I agree with Councilor Gallant the municipality does need to determine what the needs are for the long term. To this end, and yes I know it is only preliminary at this point but Myron Thompson the Director of Public Works reviewed with council a few meetings back the long term Infrastructure plan and the equipment replacement program. He stated that the municipality would need to put aside $430,000 per year for infrastructure and $410,000 for equipment replacement Add that to the $100,000 a year for the lodge gives you a total of $940,000 per year.

How will that amount be raised? If that number is even remotely close that equates to a tax increase of 14% next year (remember that would not include ASFF or Seniors Housing). At this point, nobody as even spoke about putting aside dollars for new recreation facilities. Wow, there better be many inefficiencies out there.

One more thought on the issue of policy, I keep hearing the need for policy because councils and administrations change every few years. I recognize also the importance of policy but let us not lose sight of the cold hard facts on policy. As this council spends a lot of time and energy on creating policy, first, it is only as good as the people enforcing it and second it can be changed by the political whims of future council just as quickly as it can be created.


Anonymous said...

So Dean are you telling me that we only saw 1.2% less tax increase this year than last. We put no money in reserves, then we had to finance equipment to the tune of $530,000.
If that is all true this is nuts we are going no where fast.


Anonymous said...

Could not agree with you more concerning policy.There was a policy on advertising and this council changed it.So they make any policy they wish but it is only good until any council decides to change it.
Our mayor wishes to have a policy on everything as if this will solve all of our problems.Even this present council could change a policy they have approved in the past all in the same term.So you write a policy and then when the issue comes up, then you debate the policy and make changes as to the majoritys wishes.So basically policy writing is a waste of time.

Crowsnest Pass Home said...

Please don't get me wrong there really is a need for policy. I am just getting tired of hearing that policy will solve all our problems.
The example you gave on the advertising there was a policy in place this council flushed it, six months later there is still not a new policy in place. Most places I have been in my life you usually don't flush a policy until you have something to replace it with.

But I guess for the right reasons you make exceptions.

Maybe Council should put in place a policy that covers off, what happens when there is no policy in place or during the transition period while a policy is changed.

Anonymous said...

Am I hearing this right we are almost into May and there is still no advertsing policy??????

Anonymous said...

What kind of game is being played here? from what I have been reading here are some things that should concern us all.

2010 we got a 3.2% tax increase.
The taxpayers put $450,000 into reserves.
The taxpayers put $250,000 into equipment.
Council adds no positions in fact it refuses administrations request for additional employees.
According to Mr Gallant the municipality will show a surplus of $350,000. Not a bad year all in all financially.

2011 we get a 2% tax increase. (Actually never mind the 2% crap mine went up 5%)
The taxpayers put $100,000 into reserves.
The taxpayers take on $530,000 in debt for new equipment.
Five new positions are created.
The budget for 2011 shows no surplus.

Looking ahead to 2012.
Taxes go up ?
How much money is placed in reserves?
Public Works determines no additional debt load required all the equipment is in great shape.
Administration feels that the municipality as ample employees no new hires required.
Thanks to the elimanation of all municipal inefficiences, tremendous dollars are found to create a surplus. Maybe to run our new transportation system to Pincher Creek for swimming.


Anonymous said...

Dean check out Saindon's Blog he is already talking about building up reserves

"Will we see reserves being built up over the next few years? The answer is yes, but it will be done through an organized method. Potential tax increases will be distributed to the various reserves and reductions in operations and duplication of services will provide the necessary funds for continued improvements to our current municipality"

Few words that scare me in there, "potential tax increases", "reductions in operations" "duplication of services".

The public voted for most members of this council because they felt it really was time for change.

The problem in there are these changes going to be along the lines of elimination of services, (spring cleanup) reduction of services (snow clearing) and potential tax increases from councilors that spoke to not increasing taxes. (see 2011).

I was looking for improved facilities (Indoor swimming Pool),
Less government (not more employees), more enhanced services (doing more with what we have). And absolutly beyond a shadow of doubt no more tax increases.

I really am getting to the point where I am wondering if we changed for the worse.


Paul said...

Maybe we need a policy on change.

Anonymous said...

Can't wait for the Economic Task Force Report.
The answers are out there we just need to find them.
A lot of good people on that task force, unselfishly donating their time for the betterment of the Crowsnest Pass and its citizens.
This will be a different community five years from now.

Change is coming you decide if you want to fight it or embrace it. But you will not stop it.

Anonymous said...

Potential tax Increases

When a politician uses those words be very scared.

Anonymous said...

On Saindon's blog he is now blaming the province for the tax increase (ASFF) well he did not say that when he slammed the previous council for raising taxes.

He also stated that they found the money to offset the Seniors increase. Why did they not find the money to offset the ASFF increase (simple they created all those new jobs)