City Ends 2020 With A Small Budget Surplus
If there are a few words which could be said about the City of Moose Jaw’s finances in 2020, the Year of the Pandemic, it was not a stable year when it came to setting the Operating Budget.
There were calls from the business community to re-open the budget after the impact of the pandemic and the economic hit it would level against their ability to pay taxes became apparent. Council re-opened and re-drafted the Budget as well as expenditures more than once.
The 2.3 percent property tax increase the majority of Council voted for in December 2019 was moved to a zero percent tax increase following re-opening the Budget.
The City looked for every cost saving.
From not re-hiring seasonal workers and re-deploying otherwise some of the idle permanent staff at closed recreational facilities, to cutting non-critical Capital expenditures and even turning off the air conditioning at the Moose Jaw Cultural Centre during an extended heat wave the City seemingly left no stone unturned to reduce expenditures.
Additionally the City caught a break in the tax appeals process by winning long running appeals and bringing in revenue from those appeals dating back up to three years into the 2020 revenue stream.
In the end the City managed to eek out a razor thin Budget surplus of approximately $30,000.
The preliminary year end report of Revenue and Expenditures has the City bringing in $48,352,554 in Revenues versus $48,322,700 in Expenditures resulting in the surplus.
“At this time I would say to look at a $30,000 surplus I would say is a significant achievement considering everything we have gone through,” city manager Jim Puffalt told Council.
Puffalt said Moose Jaw being one of only two cities provincially in 2020 to come in with a zero percent mill rate increase and also a surplus was a testament to the hard work everyone had done.
“We are pretty proud of all of the work everybody has done,” he said.
It needs to be noted despite the City’s efforts to reduce property taxes and lessen the blow of the pandemic the amount of tax arrears continued to grow. But at the same time the City was able to move many property owners behind on their taxes to a tax installment plan.
Finance director Brian Acker tempered Puffalt’s glowing report that although the year end financial projections came in months earlier than usual that the final numbers could change if any hiccups were to appear.
“Something you have to keep in mind we are dealing with a $90 million budget overall and a point one (0.1) percent change in that is $90,000 dollars so it is not insignificant,” Acker said.
“Although we have a small surplus at this time it can certainly change (once the year end is officially finalized) ”
Tax Appeal Wins Help Generate Surplus
The City’s successful appeals of property tax decisions made by the local Board Of Revision to the Saskatchewan Municipal Board (SMB) led to an influx of funds to City coffers in 2020 and the resultant surplus.
“We were able to receive Saskatchewan Municipal Board decisions SAMA (Saskatchewan Assessment Management Agency) had filed on our behalf for 2017, 2018 and 2019 those were in the City’s favour,” Acker said, adding “so what that ends up doing is that revenue we had not received over that period of time has now been recognized in 2020.”
“(It had a) significant impact on our bottom line but it really is the real reason why were able to have a small surplus at this point.”
Acker stated the decisions would have a positive impact of about $275,000 in future tax years for the City but he cautioned that the “hamster wheel of appeal process” as well as 2021 being a re-evaluation year would likely spawn new appeals and a unknown drop in revenues until the appeals were won.
“It is a long ways down the road when you consider some of these appeals were in 2017 (and the City only won in 2020).”
The tax appeal wins helped offset revenue losses in other areas such as reduced proceeds from photo radar fines.
Preliminary Year End Out Early
Getting the 2020 Budget set in December 2019 had the benefit of the preliminary year end revenue and expenditures report for 2020 being put months earlier than it usually is.
“This isn’t a normal practice for us, usually you would not get results related until year’s end (this early) probably not until May at the earliest,” Acker said, adding “because of our ability to complete the Budget in the previous year for the coming year it tends to free up a lot of resources for our department in terms of being able to do year end.”
At this point in the preliminary year-end process, the City is showing a small surplus of approximately $30,000 for 2020. It should be noted this is without using any of the Federal Restart funding in 2020 (all was deferred to 2021) and with a 0% municipal tax increase. It is important to note that these are preliminary figures and subject to change as we move through the year-end and audit process.
– At this point it is projected that municipal tax revenue will come in significantly higher than budgeted. The reason for this is that the City has recently received the 2017, 2018 and 2019 Saskatchewan Municipal Board (SMB) assessment appeal decisions. Those decisions have been in the City’s favor and result in a significant increase in funding for 2020. For future years, there will be some benefit as well although this can be tempered by future assessment appeal decisions. This is especially true for 2021 being that it is a revaluation year.