Two city councillors who argued in vain to lower Maple Ridge’s property tax increase for 2021 enjoyed an apparent “I told you so” moment, after an auditor’s report on the city’s finances.
In this public sector version of a balance sheet, council learned the city has an operating accumulated surplus of $34 million, including $11 million in general revenue.
Most of the rest is in water ($16.7 million) and sewer ($6.3 million) operating budgets, and those funds are kept available to mitigate large expenditures from Metro Vancouver regional district that would otherwise hit tax bills.
There is also a balance of $129 million in reserves. Staff told council this would have been only $52 million if the city had been able to deliver everything in its financial plan as scheduled. Most of the reserves are committed funds, according to staff.
“The city is in great financial standing,” is how Coun. Ahmed Yousef summarized the city’s position, and he had wanted to give taxpayers a break “rather than squirreling money into a fund.”
“Overall results for 2020 are positive,” said corporate controller Catherine Nolan’s report. “We ended the year with an annual surplus amount of $54.2 million, and an accumulated surplus balance of $1.26 billion. The city’s reserves and long-term financial plans reflect the ability of the city to meet its future obligations.”
Nolan clarified for council the $1.26 billion surplus balance takes in all of the city’s assets, including buildings and infrastructure.
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The audit was delivered to council on May 4. A week earlier, councillors had passed a budget with a 4.3 per cent increase to the 2021 tax bill. That day, councillors spoke against a motion by Coun. Gordy Robson, seconded by Yousef, to make amendments that would have limited the increase to 2.7 per cent.
Coun. Gordy Robson said he knew the city is in a strong financial position, and wanted to give taxpayers a break during the pandemic.
“I’m disappointed,” he said after reviewing the auditor’s report. “Quite clearly the municipality is in fine financial shape, and we could have done better this year by reducing taxes.”
“Some people would say, if they read the report, that we are over taxed,” he said. “It’s a good discussion for the community to have.”
Yousef said councillors should start preparing now to hold the line on tax increases in future.
At the April 28 meeting, when the financial plan was reviewed, city staff spoke against reducing the budget increase, saying city initiatives would not be completed.
Trevor Thompson, city chief financial officer, was asked how that can be accurate, given an $11 million operating surplus in general revenue.
“One per cent tax increase represents approximately $900,000 in ongoing funding annually (for example: $4.5 million by 2025 and more going forward),” he said. “As a principle of financial sustainability, one-time savings are not used to cover ongoing costs. The external auditors reviewing 2020 statements (only) are well aware of this, and are satisfied with the 2020 statements.”
As council reviewed the auditor’s report, Coun. Ryan Svendsen asked how much of the city’s reserves could be considered liquid, but staff was not willing to quote a figure at that time. Much of the reserves are earmarked for initiatives.
Thompson clarified the figure is just over $10 million.
“To put this into perspective, this amount ($10 million) is equivalent to one month’s operating costs for our city,” he said. “This again is one-time money that if utilized to reduce the 2021 tax rate would require a greater tax increase in future years, or jeopardize projects and/or programs being completed on council-directed schedules.”
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Thompson was also asked whether it would have been useful for councillors to see the 2020 consolidated financial statements prior to debating the 2021 financial plan. He explained the budgeting process starts well before the auditor’s work is done.
“The 2021-2025 Financial Plan was introduced in September 2020 and council provided first, second and third reading of the Financial Plan Bylaw in early December 2020,” Thompson noted. “That’s well before 2020 financial year ended, and the 2020 consolidated statements were derived. Final reading of the 2021-2025 Financial Plan was provided by council at its meeting on Jan. 12, 2021. Again, well before the previous year’s consolidated statements and audits were completed, as has been the practice each year.”
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