Texas Road, operating deficits among updates to town council

 

By Ron Giofu

 

Town council received another update on its finances and also got a glimpse of the options out there to possibly reconstruct Texas Road.

Town Logo Small-webAt a special meeting Monday night, council voted to bring the cumulative operating deficit from 2011 and 2012 from $407,112 to zero through a transfer from the tax stabilization reserve and also to have “the appropriate policies” brought forth to ensure such issues are dealt with proactively in the future.

The operating deficit for 2011 was over $1.6 million but a 2012 operating surplus was over $1.2 million, lowering the cumulative deficit to the $407,112 figure.

Director of corporate services Val Sequeira said the town “had to do extensive work with our auditors” and have also had to “do some cleaning up” when preparing the figures.

“My expectations were that we were going to have a larger deficit than what we have at this point,” Sequeira told council.

The numbers are still “large,” he added, noting the numbers weren’t what he would normally want to present. He pointed out municipalities are not supposed to be in a deficit position.

“It doesn’t give me pleasure to present these numbers,” he said. “It is what it is.”

In a written report to council, Sequeira stated that “when preparing the budgets for 2012 and 2013 respectively, no provision was made for any prior year deficit/surplus,” attributing that to the financial reports that had been “lagging.”

Councillor Carolyn Davies wondered how the $407,112 compared to the $38.5 million debt, saying that people are upset and the deficit being “one of those things people get cranky about.” She added that she is concerned that the public is “hearing less than accurate information.”

Sequeira pointed out there is a $38.5 million debut on the books, with that largely being attributed to the many infrastructure projects undertaken in the last few years. He said after the meeting that roughly $90 million in work has been done with alternate sources of funding such as grants covering 52 per cent of that.

“In a sense, $38 million is a mortgage we have,” he told Davies. “It’s something we are going to pay down over a period of time. That’s normal for many municipalities.”

Councillor John Sutton said he did some “homework” over the weekend and found out 52 municipalities in western Ontario have not reported their FIR figures while Amherstburg’s have now been posted. He said “people like to point fingers” so “it’s nice to see Amherstburg’s numbers are up there while others are lagging behind.”

Town council was also updated on its 2013 budget variance. As of July 31, operating expenditures are projected to be $126,000 over budget at year’s end primarily as a result of higher debt principal and interest costs associated with new debt that was approved Aug. 12. The operating revenues are expected to be $231,000 under budget at year-end due to building permits being over-budgeted by $165,000 and lower penalties and fees on unpaid taxes as more residents are paying taxes on a timely basis. The latter had an approximately $90,000 impact.

“The forecasts are best estimates based on experience to date, historical knowledge and staff judgment and will get better as the year progresses,” Sequeira added in his written report.

While CAO Mike Phipps acknowledged that internal measures would be part of the process to address the current deficit situation, he voiced issues he has had with budgeting overall.

“I’ve had some concerns about how things transpired and how we got to where we are,” said Phipps.

In relation to the deficit that carried over from 2011, Phipps believed “council proceeded with budgeting over two years without an idea of what council faced with the deficit.”

Phipps added he has spoken with staff about budgets for their respective departments and received answers that they didn’t know about certain figures inserted into their departmental budgets.

“I’m very concerned about the quality of budgeting and the budget measures being presented to council,” he said.

Councillor Bart DiPasquale said he has noticed a difference in financial reporting since both Phipps and Sequeira have come on board.

“You can see a change coming already, in my view,” said DiPasquale.

Director of engineering and infrastructure Lou Zarlenga presented two possible options for the Texas Road project. Both are scaled down versions of the $6 million option council approved earlier this year, the same option that was shelved June 18 when the project was held in abeyance pending a complete review of the town’s finances and the approval of the 2012 financial statements. Current options are $3.55 million or $3.73 million with the cheaper option utilizing existing “cobra” style lights, having an eight-foot paved path on the north side of the street and a new roadway. The latter would have a nine-foot paved walkway on the north side, a bike lane on the south side with many of the amenities offered in the earlier $6 million project possible for addition in the future.

Zarlenga acknowledged the tendering process is a “crapshoot,” but the project could start this fall if council approves an option. The two options will be presented at a public open house Aug. 28 from 4-8 p.m. at the UCCU Complex.

Councillor Carolyn Davies expressed concerns about parking in the area while Councillor Diane Pouget said the finances were her biggest worry. Phipps noted that when the matter returns to council with a report Sept. 16, a report that will also include public feedback from the open house and whether residents like either option or not, financial information will be provided.

“If we bring back a recommendation, it will come with a full analysis on financially how to proceed,” said Phipps.

Zarlenga stated administration has an idea on how to proceed financially but wanted to “limit the conversation until a report is in place.”

The June 18 meeting where Texas Road was held in abeyance was the start of the financial process the town has been working on with Sequeira stating his intention was simply to say “let’s slow it down a bit,” get caught up and see where the town is financially.

“I think we are at the point where we have dealt with the issues from the past,” he said, adding he has felt bad over the “panic” the financial issues have caused in Amherstburg.

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