MOOSE JAW - The City of Moose Jaw ended 2023 with an operating deficit of more than $1.4 million and plans to use long-term investment earnings to cover over half that amount.
The overall deficit in the general revenue fund (operating fund) was $1,420,165, which flowed into the accumulated surplus fund and reduced the deficit by $178,488, a council report said.
The Moose Jaw Police Service accounted for $307,681 of last year’s deficit but will cover the remaining amount by moving money between accounts.
Also, snow operations were over budget by $151,990, but city administration will take money from the snow removal reserve.
Removing these two expenses and the accumulated surplus money reduces the shortfall to $782,006, which administration says should be covered using earnings from the long-term investment portfolio.
“The rationale for recommending investment earnings is that (in) 2023 — and again in 2024 — the city’s investments have been returning more than the targeted level of returns and withdrawing this $782,006 will not have a negative impact on investments,” the report added.
During its July 8 regular meeting, city council unanimously approved the 2023 audited financial statements and agreed to cover the deficit by taking $178,488 from the accumulated surplus, $151,990 from the snow removal reserve and $782,006 from long-term investment earnings.
While the police service transferred $307,681 from one fund to another to cover its shortfall, it actually finished 2023 with a total deficit of $724,192 and used money from its accumulated surplus to cover $416,511.
Therefore, if the police service’s total deficit had been included in the municipality’s total deficit, the latter would have been $1,836,676, requiring an additional six-per-cent tax increase last year on top of the 4.5-per-cent tax increase.
Report highlights
Brian Acker, director of finance, highlighted some areas of the financial statements during the meeting.
The general revenue fund is the city’s operating fund and is the source of funding for core municipal services, he said. Last year, this fund had revenues of $57.8 million, of which $34.04 million came from municipal taxation, which accounted for almost 59 per cent of overall revenues.
The second-largest revenue stream was contributions, grants and subsidies at 19.3 per cent.
“We rely heavily on municipal taxation … and … are in a position where there’s a limit to how much additional tax revenue can be generated through municipal taxation,” Acker said.
“There needs to be identified some other funding sources. What those are, I’m not sure,” he continued. “But … simply increasing (municipal) tax revenues won’t always be the answer.”
In 2023, the general revenue fund had total expenses of $59.2 million, of which $23.5 million was for salaries for protective services representing 39.7 per cent of all expenses. The second-largest expense line was recreation and community services at 21.4 per cent.
Public works was the smallest expense category with $5.9 million or 10.8 per cent of all expenses, said Acker. This should encourage council to spend more money here to meet the community’s needs.
The report said that by Dec. 31, 2023, the city's debt load was $64,074,118, down from $68,739,214 the year before. While the municipality expects its debt load to fall to $41,721,052 over the next five years, it will add $14.3 million this year to support the Buffalo Pound Water Treatment Plant renewal project.
The city’s legislated debt limit is $95 million.
The long-term debt per capita ratio shows that Moose Jaw’s debt per person was $1,903.29 last year, a drop from $2,041.86 in 2022 and $1,742.08 in 2019, the report said.
The city’s reserves increased by $6.5 million to $114.58 million, although that account has not increased much during the past 10 years, said Acker. Further, residents have been pressuring council to use that money instead of increasing that fund, so something may have to change between contributions and spending.
The interest the city takes from the reserves represents about 20 percentage points of municipal taxation that it has not had to levy during the past few years, he continued. However, over time, inflation will eat away at that money’s purchasing power.
Overall, the City of Moose Jaw is in “good financial condition” and has a “strong financial position” to continue providing programs and services while funding future capital projects, Acker said.
However, council should understand that it cannot complete all projects simultaneously because of limited funding, he added. So, council must weigh what to pursue first; it may have to borrow money to fund capital projects like the Crescent View Lift Station, Fourth Avenue Bridge and a new outdoor pool or defer some for several years.
Council’s comments about the 2023 audited financial statement will be featured in a separate article.
The next regular council meeting is Monday, July 22.
