Bryan Lambert gave a presentation at Monday’s Public Budget meeting that discussed “big picture” questions – he didn’t ask for anything specific to be included but instead asked questions about the budget overall. He pointed out that the actual total budget was more than double the amount collected in taxes, he wanted reserves to be spelled out and staffing to be discussed. He also pointed to a surplus and overspending – seemingly opposing items – and a trend in expense increases that are faster than inflation. His information source was the publicly available Financial Information Report (FIR) from the Ontario Ministry of Municipal Affairs which covers all revenue and spending in municipalities – for example in Cobourg, that includes electricity, water and Northam Industrial Park which are reported separately.
Bryan’s full presentation can be downloaded from the link below but it’s worth looking at some of his data.
Total Revenue and Expenses
For 2017, taxation revenue was $22M but the Total Town revenue was $50M – the big additions were user fees $16.5M and rental income $4.5M. Although not spelled out, user fees have to be Water and Electricity income (for Holdco) and rental income would be from Northam Industrial Park. These are interesting numbers but not contributing to Town Expenses covered by Taxation.
Reserves are not clearly explained in the budget process. For example, Development Charges are used to replenish an account then amounts are withdrawn to pay for various department costs. As of December 2017, the total reserve was $7.6M, mostly assigned to roads and wastewater. But “recreation” had a deficit of $1.8M and growing. Bryan commented: “There is cause for concern here! How and when will this be corrected? Does it affect the Property Tax Levy?”
Bryan says that the following reserves should be disclosed and discussed:
- Police services
- Development Charges
From 2013 to 2017, staffing levels appear to be steady – that is, not growing overall. Bryan said that these numbers are not provided in the budget discussion but should be since they are already available publicly via the FIR.
Surplus and Overspend
Bryan quotes FIR showing a significant Surplus for several years as well as Overspends. It’s not clear what this means; they seem to contradict each other. Is Bryan implying poor budget management? He says: “Has the surplus been used?” and “the overspend is cause for serious concern.” In any event, an explanation would be useful. To my knowledge, although Council asked for quarterly reports on budget performance, few have been provided. The last one I am aware of was Q3, 2017. Go here. It did not show any significant deviations from the planned budget.
The graph at right illustrates the increase in personal incomes as represented by OAS and CPP compared to the increase in the Town’s expenses and Property Tax increases. He concludes that Cobourg doesn’t have a Revenue problem, it has a spending problem.
In summary, I would say that Bryan’s overall message is that there are some items that impact budget that are not discussed in budget meetings but should be.