CITY’S FINANCES; FEAST OR FAMINE – WHAT IS THE TRUE PICTURE?
While annual audited financial statements are released to the public on a yearly basis, many questions still linger on the minds of taxpayers of this city about the true financial picture and what it means to them. Unfortunately this is a complex issue, and even though the media has done a fine job of covering it over the years, the wider implications for the residential and business taxpayers, city employees, service providers and receivers, economic development agencies, and potential investors, have not been fully explained.
As a professional Management Accountant and a past Councillor (1994-1997) I strongly believe in open communication and transparency of action at all levels of government, especially at the municipal level which is the closest to the people and where decisions of Council have a more immediate impact. In this and following articles, I will provide a clear picture of how well or poorly we are doing financially, and what it means to us not only today, but also in the future.
As entities established by provincial legislation, municipalities are subordinate to the Province and regulated by the Municipal Act. Unlike their provincial masters, they cannot issue debt to meet operating shortfalls. For the first time in many years the city is facing a financial shortfall in its annual operating budget. The options available to Council are basically two: 1) increase revenue (get more grant dollars from the provincial government, increases taxes, increase user fees, or allocate reserve fund dollars to operation) and 2) control costs (reduce contributions to capital programs, reduce expenditure in municipal programs and services).
Recent decisions in regards to extra policing for the casino, changes to transit routes and increased bus fares, and layoff notices to RPN’s at the Homes for the Aged (eventually revoked by Council on Tuesday night), are only few examples of the kind of difficult decisions the city faces in regards to maintaining present level of services while keeping costs down. Unfortunately, such frugality was hard to find in the glossy "Report to the Community" that cost close to $100,000. Surely there must have been a less costly way to communicate the same information.
While the City has historically been very conservative in its financing (pay as you go) and received another A+ credit rating in 1999 by the Canadian Bond Rating Service, (it will help with lower interest charges when the city issues debentures to finance the $25 million contribution to the new hospital), the same report also highlighted some major financial challenges and issues that need to be resolved in order to maintain such rating in the future (to be discussed in the next article).
Whatever decisions need to be made, it is important to remember that the question of finances (i.e. taxes and levels of service) does not stand in isolation. In fact behind every decision there are people who are going to be affected. While proper stewardship of the city’s financial resources is directly related to the concept of value for your tax dollars (efficiency), prioritizing our spending in areas of most need and value to the community as a whole (effectiveness), should be the guiding principle.
Frank Pullia is Principal of Pullia Accounting & Consulting. He can be reached at 767-6579 or via e-mail at frank@frankpullia.com. Previous articles can be viewed at his web site at www.frankpullia.com