Financial Statements Draw Questions But No Answers

It was a night of discussing increasing debt, economic indicators and unanswered questions as the City of Moose Jaw released its audited financial statement for 2018.

Released this past Monday evening at Council the statement provides extensive details into the City of Moose Jaw's financial position for 2018.

For Councillor Brian Swanson the city's financial position is not a rosy one.

Worse yet in the things Council had control of they had worsened the economic potential for business and the city as a whole, he said.

Increased debt, poor economic indicators as well as growing taxation were what Councillor Swanson highlighted in the audited financial statement.

Additionally Councillor Swanson was critical of what he saw as the late release of the statement compared to other centres and the director of financial services Brian Acker being on vacation, the second year in a row, leaving Council with limited answers regarding the statement.

The 2018 Audited Financial Statement and increasing debt load for the City was presented - Photo Courtesy Roxanne Ashe - Virtual Interiors Photography

“It is almost seven months since the fiscal year end and these are pretty important documents and we mentioned before how maybe other cities have have had theirs for awhile but…” he said about the statement's release just after pointing out how it was the second year in a row the finance director was on vacation when they were released.

Councillor Swanson was critical of the City's policy of all commercial properties sharing the brunt of successful property tax appeals the year following when the effect of those appeals is redistributed by City policy to all properties in the commercial property class.

“I have always maintained how that makes sense I have no idea and we have a stagnant tax base. And when commercial properties appeal because they were overtaxed and win we just put it onto other commercial properties. That might be one if the reasons we don’t have much commercial growth,” he said.

Councillor Swanson would highlight economic indicators within the financial statement which he saw indicating a continued weak local economy in 2018.

“There are some things which show the economic vitality of a community, for instance, the tax levy. If your tax levy is growing your community is growing,” he said stating it was not a good sign when $600,000 less than budgeted was collected.

The area of licenses and permits was another economic indicator he highlighted.

“More licenses and permits means there is more economic activity,” he said, adding “we had budgeted $1,473,000 for that but it actually came in at $1,260,000 and some $220,000 low.”

Rents and concessions coming in below the budgeted amount was an indicator of a weaker than expected local economy he said.

Lower earnings than budgeted for in transit was another economic indicator he pointed out.

“Rather then collect $651,000 in transit earnings (the budgeted amount) we collected only $525,000. Some 20 percent less than budgeted…we had actually collected more in 2015 than we had budgeted last year.”

In 2015 the City collected $667,000 in transit earnings.

The area of parking fees in the parking metered Downtown was a concern for Swanson.

“The City of Moose Jaw in recent years has started to see the parking meters as their golden goose that lays golden eggs. Twice in the last five years I do believe there has been significant increases in parking meter rates such that now a quarter buys you six minutes at some meters. Last year we budgeted $750,000 to be collected from parking meter receipts and instead we collected $557,000. That in where we talk about helping out the Downtown. I made this point when rates were pushed through you want to help the Downtown you don't significantly increase the parking meter rates.”

“As a result we have declining parking meter revenues.”

The report additionally stated in 2017 parking meter receipts were $659,345.

It also should be noted in 2018 the budgeted amount for parking meter fines was $205,180 whereas as the actual amount collected was $169,872. In 2017 the actual amount of parking meter fines was $217,032.

Councillor Swanson went on to state in the area of punitive actions such as fines collected by the Moose Jaw Police Service (MJPS) was above the budgeted amount.

The City had budgeted $1,800,000 for fines by MJPS but instead had collected $2,287,000 which is $500,000 more than budgeted, he said.

“As a city council we need to be aware of these indicators and not increasing taxes and putting more taxes on commercial property.”

Per capita taxation and debt were two issues of particular concern to Councillor Swanson.

The statistic showing Moose Jaw as having the lowest per capita taxation, at $842.23 per person, was an irrelevant statistic according to Councillor Swanson. He based this opinion on how much Moose Jaw residents actually paid the City.

Councillor Swanson called on a new statistic showing the per capita debt to be presented as part of the report.

Moose Jaw's per capita debt was $1879, the highest in the province of all major centres, and predicted to climb he said adding high debt and increasing tax rates negatively impacted the city as a whole.

“Why wouldn’t we have some analysis of what our debt is? Is it because our debt on a per capita basis shows we are outstripping the other communities in the province in a significant way?” he asked.

Councillor Heather Eby asked about the changes in transit fees and the parking meter rates.

“I’m not really sure if that did what it was suppose to do. It was a good idea but perhaps that needs to be looked at again especially given the high subsidy of transportation,” Councillor Eby said.

“As well parking rates were higher and that did not increase either in terms of revenue. It does not seem that either of those two things really paid off in a way Council was hoping for,” she said.

In an effort to encourage transit ridership and open up available parking in the Downtown the City halved the fare to ride Downtown - for example the previous $2.50 for an adult fare was reduced to $1.25 - eliminated transfers and increased parking meter rates in 2017.

Councillor Eby disagreed with Councillor Swanson regarding the City moving from no debt to the present $94,968,116 in 2018.

“Are you better off to have debt and own a home or have no debt and no assets?”

”I think Moose Jaw in those years when there was no debt were years when cast iron water main replacement could have begun with some debt taken on…having no debt to me means to me you are doing a good job.”

Councillor Crystal Froese defended the increased debt load as necessary for water security for the city.

“A large percentage of that 30 million is for water security to the Buffalo Pound Water Treatment Plant and this again is one of those projects which is generational. We won't see something this large come across our paths hopefully again…the only way we could do this is by taking out a loan and debt,” Councillor Froese stated.

Councillor Swanson disagreed with the opinions of Councillor Eby and Froese regarding the debt stating they omitted what he saw as “upside down priorities” where in the past the City had invested heavily in cultural and recreational facilities and not core infrastructure renewal.

He took direct aim at the $60 million spent on the Multiplex which later became known as Mosaic Place and the Yara Centre.

“What is forgotten is the priorities when we were debt free was to take on construction of recreational and cultural facilities and ignore those infrastructure things,” Councillor Swanson said.

Also discussed was the fact for two years in a row City of Moose Jaw finance director Brian Acker was not present to answer questions as he was on holidays.

In response to questions from Councillor Scott McMann about the Financial Statement city manager Jim Puffalt said Administration would provide them at the next regular City Council meeting.

Councillor Dawn Luhning also expressed her concerns about the finance director not being present.

SELECTED REPORT HIGHLIGHTS

A number of highlights of the report were mentioned but not discussed at council.

The importance of Moose Jaw's extensive reserves to help keep taxation down was highlighted in the report.

Interest earned on reserves was $3,797,393 in 2018 was down due to the low interest rates in the market place.

“Even at these reduced levels, the $3,797,393 in investment revenue would require a 12.9 percent municipal taxation increase to replace the revenue if it was not generated by the City's reserves.”

A forecast in the report states “future benefits from reserves is expected to be more due to the new investment policy.”

The estimated increased target returns for investments is an additional $2,750,000 annually due to the new investment policy.

The City of Moose Jaw's debt is shown as climbing from $46,295,483 in 2014 to $52,095,829 in 2015, to $52,186,543 in 2016, to $63,278,864 in 2017 and finally $94,968,116 in 2018.

The $30 million debt increase in 2018 is largely attributable to the Buffalo Pound Water Transmission Line and water reservoir work.

The two main reserve are the Capital Expenditure Fund at $60,760,335 and Equipment Reserve Fund at $27,765,329.

Long term debt for the City of Moose Jaw is listed at $63,692,269.

The MJPS spent $687,655 on its Serious Crimes Task Force in 2018 although $570,000 was budgeted. In 2017 the MJPS spent $330,000 for its Serious Crimes Task Force.