Surplus shift ensures sound financial position

BY KIRK STARRATT

The Advertiser

NovaNewsNow.com



Kings County council has approved moving certain surplus funds into reserves. Corporate Services director Bill McKennan, who made a presentation regarding the disposition of surplus at the Tuesday, Feb. 6 council session, said the use of reserves is one way of maintaining a municipality’s sound financial position.

The committee of the whole received the accountability report for the period ending Dec. 31, 2006 at the Jan. 16 meeting. This report indicated that a surplus of $290,100, representing less than one per cent of the operating budget for the 2006-2007 fiscal year, was forecast for year-end, March 31.

Staff has completed a thorough account analysis of each department to provide an extremely accurate forecast and identify budgeted initiatives that may not be completed in the current fiscal year. The executive committee reviewed several items identified by staff and made recommendations regarding the disposition of surplus.

The major contributing factors to the projected surplus are that revenues came in over budget by $158,000 and expenditures came in under budget by $153,500.

The executive committee is recommending to council that all unexpended funds relating to snow removal in the 2006-2007 operating budget be moved to the operating reserve fund for the purpose of a storm management reserve; that all unexpended funds pertaining to insurance be moved to the operating reserve fund for the purpose of a claims management reserve; that a sidewalk construction reserve be established (the initial contribution of $44,500 will be unexpended funds from the 2006-2007 operating budget); that the $43,000 earmarked for the new public works vehicle be transferred to the vehicle replacement reserve from the 2006-2007 operating budget; that $100,000 be transferred to the valuation allowance reserve from the projected 2006-2007 operating surplus; and that an additional $30,000 be transferred from the projected 2006-2007 operating budget surplus to the elections reserve fund.

The potential withdrawals from these reserves will be considered during the 2007-2008 operating budget deliberations. McKennan said if all these actions were approved, the projected surplus to-date would be reduced by $217,500.

Councillor Madonna Spinazola said she understands why the municipality is doing this. However, she said taxpayers would probably be upset if council set the tax rate last year, didn’t spend the money and ended up placing it in reserves. She suggested that if there’s a lot of money left in the snow removal budget, it should be put back into the operating fund and they could begin building reserves in the next fiscal year.

Councillor Chris Parker agreed with carrying the surplus over into next year’s operating budget and begin building surpluses next year so the public has a chance to say whether they agree or not.

“Lots of people would say it’s overtaxation,” he said.

McKennan said the only way not to spike the budget in any given year would be to build reserves and make withdrawals as necessary.