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Small surplus on 2012 Town operations

12/11/30 — A mild winter last year, the sale of land in tax arrears and efficient labour bargaining have helped result in a $440,000 surplus on Town operations for 2012.

The surplus is nothing to get excited about because town councillors spent more than half of that amount already on unbudgeted assessment appeal rulings and legal fees partly as a result of the firing of the Town solicitor.

The Town also credits a significant increase in fine revenue from provincial offences such as bylaw infractions and traffic violations and an increase in payments-in-lieu of taxes from the Region for two new pumping stations.

The decision in front of councillors is whether to put the surplus into a reserve that was depleted to cover the unbudgeted expenses.

The reserve account in question is called the “rate stabilization reserve” which is in place to cover unexpected expenditures.

Town treasurer Helen Chamberlain recommended Nov. 19 — per Council’s policy — to plow $340,000 back into this reserve. [The additional $100,000 which comes from savings in snowplowing is recommended to be put into a reserve for “emergency management” such as a major snow storm.]

At the beginning of the year, the rate stabilization reserve amounted to $857,000 and has been drawn down to $584,000. It’s less than three per cent of the total general levy — revenues from taxation — and Town policy requires a minimum of five per cent in the reserve.

In the past, council has drawn on the reserve to fund operational deficits at the end of the year and replenished it with surpluses in following years or with slots revenue.

Last year, council departed from its own policy and refused to top up the reserve from a $150,000 surplus in 2011 which would have put the reserve over the $1 million mark to meet the five per cent guideline.

The decision last year saved a little less than one per cent on tax bills.

Earlier this year, council authorized $150,000 from the rate stabilization reserve to fund adjustments from assessment appeals plus $50,000 for associated legal costs and another $60,000 for legal fees related to the Bay Beach appeal and to cover work the Town solicitor would normally have done until she was fired without cause in April.

Councillors also dug deep into a capital reserve in 2011 for $374,000 to rebuild the Point Abino Lighthouse. It was not replenished in 2012.

As well, councillors last year declined to contribute recommended amounts to other infrastructure reserves for roads, drainage and other public works.

The Town also assumed more debt to finance the Garrison Road sewer and the new Central Avenue fire station, pushing the debt to reserve ratio closer to the 1:1 limit.

While there is no hard and fast provincial regulation for operational reserves, the province is adamant about capital reserves to fund future replacement of infrastructure.

Town council will also grapple with the loss of $1.2 million from slot machines — most of which was poured into reserves to fund capital works.

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