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.