The audited financial statements for 2017 for the City of Estevan were released at Monday night’s meeting of Estevan city council, and they show that the city made progress in a number of directions last year.
Giselle Bourgeois and Ashley Rushton from MNP presented the document to council. Bourgeois reported that the city had $4.95 million in cash at the end of last year, up from the $2.68 million as of Dec. 31, 2016.
Bourgeois said better management and monitoring of cash flows allowed the city to have more cash on hand.
She suggested setting aside cash for catastrophes such as a flood or a large snowstorm.
“So that’s a good thing to have,” Bourgeois said.
When asked by Councillor Greg Hoffort regarding a suitable amount of cash for the city, Bourgeois said she believes the city has reached it.
“I would suggest maybe putting some of that inside in some longer-term investments to plan for the longer-term infrastructure,” said Bourgeois.
City manager Jeff Ward said that when he was hired as the city treasurer in 2013, the procedure was to “budget to zero,” and the city had no money in the bank, which was a “frustrating” way to operate, particularly when emergencies occurred
Ward would like to see the city’s cash reserve at between $4 million and $5 million each year.
“A lot of that is timing,” said Ward. “There could be bills that come n at year-end that aren’t paid until January, because the bills don’t come until the new year.”
As for whether the growing cash volumes would allow the city to not need a property tax increase each year, Ward said that would be a council decision. The city had a one per cent property tax increase this year.
The city also saw its net debt – the difference between total financial assets versus liabilities – drop in 2017. The assets were at $12.87 million, while liabilities were at $35.50 million, for a net debt of $22.93 million.
The net debt was $25.89 million at the end of the previous year.
“That’s almost a $3 million decrease, which is nice to see,” said Bourgeois.
Hoffort noted the debt remains the city’s No. 1 impediment to doing business, and almost every decision relates to the debt.
Ward said he wasn’t expecting to see that large of a reduction in net debt, because of the city’s purchase of a building to serve as the new fire hall next year.
“I just like to make sure there’s a cash reserve, and our net debt is reducing,” said Ward. “Those two figures are what I look at when I open up the statements, and I think we’re moving on a very healthy track.”
Assets rose from $10.41 million at the end of 2016 to $12.87 million at the end of 2017, while liabilities dropped from $36.30 million to $35.50 million.
Long-term debt accounts for the bulk of the liabilities. As of the start of 2018, the principal for the long-term debt was $30.39 million, down slightly from the $30.99 million at the end of 2016. The city took out a $3.5 million loan last year to pay for the purchase of the city’s new fire hall, and to pay for the work on King Street from Bannatyne Avenue to Pine Avenue.
It did pay down more than $4 million in debt last year.
Revenues were at $33.63 million last year. Taxes and other unconditional revenue, such as revenue sharing, accounted for the bulk of the revenues at $21.42 million, while fees and charges were at $10.51 million.
Revenue sharing from the provincial government came in at $2.16 million, below the budgeted figure of $2.41 million, while grants in lieu of taxes came in at $2.26 million, below the projected amount of $2.43 million due to cuts from the provincial government.
Expenses were at $31.03 million. Transportation services were the largest expense at $6.40 million, followed by recreation and cultural services ($6.22 million), general government services ($6.16 million), protective services ($5.69 million) and utility services (a little more than $5 million).
“There were some variations within the different categories, in particular protection services. The wages did increase there, as well as (there were) the repairs and maintenance that were needed on the new fire hall,” said Bourgeois.
Transportation services saw a significant increase thanks in part to the amount spent on snow removal.
The surplus of revenues over expenses before other capital contributions was a little less than $2.6 million. After $2.05 million in provincial capital grants and contributions, thanks largely to support for water utility projects, the surplus was $4.65 million.
Taxes receivable increased to $1.80 million, up from $1.18 million, Bourgeois said, which she said is a reflection of the economy.
The information contained in the financial statements influenced council’s decision regarding the borrowing bylaw, which received three readings from council.
The initial bylaw called for the city to borrow $2 million this year, for a term of 15 years, so that it could pay for work on King Street, valued at $1.4 million, sidewalks renewal ($300,000), and the demolition of the Civic Auditorium ($300,000).
But council decided to take the Civic Auditorium demolition out of the loan, and pay for it with existing funds, bringing the value of the loan down to $1.7 million. And it will be paid back over 10 years instead of 15.
The city is scheduled to pay down slightly more than $4 million in debt principal this year, so the net debt reduction this year will be around $2.3 million.
City treasurer Trudy Firth said three readings were needed last night because the six big banks are all raising their interest rates. The rate for this loan will be 4.18 per cent.
“They have given us until July 20 … to lock this rate in. Other than that, we would have waited too long, and the rate probably would be going up,” said Firth.
Ward said he believes the changes to the borrowing bylaw show council is very confident with how they’re operating, and where they’re at financially.
