Last Wednesday's Town Council meeting revealed the Town of Strathmore's financial surplus is projected to grow. With approximately an $800 000 surplus forecasted for the 2022 year-end surplus and around $3.6 million from 2021, The surplus could be sitting at around $4.4 million dollars. However, once you factor in approximately $1.2 million dollars from various projects, this leaves the Town with an exact projected surplus of $3 212 623.
The Town's Manager of Financial Planning, Budget, and Analysis Tom Maier proposed putting all of this money into reserves, as this "gives town council more flexibility in how to manage and what to do with those resources rather than just leave it sitting in what we call the unrestricted accumulated surplus. We'd rather have it focused and identified for future use."
The money will be put into the following reserves:
- Financial Stabilization Reserve $1,550,000
- Recreation Capital Reserve - $152,238
- Water Capital Reserve - $600,000
- Sanitary Sewer Capital Reserve - $600,000
- Storm Water Capital Reserve - $300,000
Maier explained the reserves were chosen because water, sanitary, and storm water are three of the biggest capital project areas, and the recreation reserve is currently in the negative and needed balancing.
Councillor Jason Montgomery was in support of moving the surplus to the reserves. Describing himself as a fiscal conservative, Montgomery believes this could help the Town manage its spending and make things easier on the taxpayers.
"During my time on council I've seen the balance of our reserves fluctuate in a downward trajectory, and I think government should only have as much money as they need to conduct the business that they need to. This is important that we do this to get our reserves into a healthier position so that we can meet the cost that we will be facing in the future as infrastructure comes due for renewal and other costs face us. This will prevent future large tax increases, so I think this is a good decision," Montgomery said.
Reserves play a key role in managing tax increases, as it creates certainty in how tax dollars are being used and helps with asset management. Maier explained the current dollar replacement value of the Town's physical assets are at around $750 million dollars, and the average annual shelf life of these assets are 40 years. For example, a firetruck may need replacing after 15 years, while a road may last 70. Maintenance, repairs, and replacements are needed every year, which is why reserves are so important in managing tax dollars and maximizing efficiency in spending.
"People in this community are going to ask, 'if you have this kind of surplus why aren't you reducing taxes?' But in terms of building in reserves and the way that this is presented, it does create a tax sustainability and predictability that we wouldn't have otherwise," Councilor Denise Peterson said.
"While this isn't lowering peoples' taxes it's giving that safety measure to focusing on building these reserves and protecting that capacity for predictability and sustainability in our tax rate for all citizens going forward."
Town Council unanimously voted in favour of putting the surplus money into the reserves.
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