Coun. Derek Shogren and the rest of City Council approved the use of reserve funds to offset the remaining $1 million of the city's $2.4 million operating deficit from 2014 on Monday night. PHOTO BY LIAM BERTI
After last year’s City Council budgeted too tight, the city has had to find over $1 million to balance their 2014 deficit.
On Monday night, council approved the staff recommendation for erasing that deficit through the use of their various reserve accounts.
In doing so, the city is draining the rest of their winter maintenance reserve fund, while also drawing on their operating budget contingency reserve and the waterfront purposes reserve fund, to name just a few.
“A lot of citizens say ‘why don’t you keep running a deficit,’ but under the Municipal Act, municipalities can’t, unlike the provincial and federal government that can just keep spending,” Coun. Derek Shogren explained on Monday.
“That’s why it is so important that we hit our budget targets that we set,” he added. “Otherwise we have to dip into these again at the end of the year.”
But it could have been much, much worse.
Last September, city projections identified the deficit at over $2.4 million thanks to some successful tax appeals, and major deficits across all of the committees, as well as the various agencies, boards and commissions.
With the looming threat of that daunting deficit, the city’s chief administrative officer, Jerry Knox, ordered staff to limit spending to critical business activities to squeeze whatever savings they could out of their operations over the second half of last year.
As a city report to council states, “departments continuously scrutinized purchases and savings were found from the postponement of non-urgent goods and services as well as through the utilization of shared resources.”
Some of those savings include deferred training and maintenance costs, gapping of positions and retirements with reviews for re-organization or delays in hiring, and a lower-than-expected overrun in winter control spending.
Under Knox’s order, those savings garnered an extra $546,000.
Those savings paired together with unexpected one-time revenues in December cut that deficit to just over $1 million, less than half of the original total.
Some of those revenues include $200,000 from Stewardship Ontario sponsorship, $62,000 from the disposal of equipment, $284,000 from dividends received in excess of the anticipated budget, and $309,000 from employee benefit rebates.
Now that the deficit has been addressed though, there are still many challenges ahead.
In approving the 2015 operating budget last night, council is taking on the risk of having to find upwards of $1.1 million in arbitrary, unidentified savings over the next year.
Some, like Coun. Tanya Vrebosch, feel that they are budgeting too tight again and warned that if those savings can’t be realized, they will likely have to dip into their reserves once again.
For more on this year’s approved budget, click here: http://goo.gl/h7DPEY
@BertiLiam
