Mendicino pitches surplus alternative
Coun. Dave Mendicino believes there’s a better way to save ratepayers’ money than using surplus dollars to “artificially” balance the water and sewer budget.
“To me, that doesn’t work . . . you can’t count on that money for next year,” says Mendicino, referring to a proposal tabled this week to reduce the 2019 water and sewer operating budget using surplus funds from last year.
Such a use of one-time dollars to offset operational expenses is not a recommended business practice, he says, noting council has another, more prudent, option.
Instead, Mendicino suggests council take a closer look at using surplus funds to help pay for capital projects. That way, one-time funding would be used to cover one-time expenses, he says.
“I think we need to explore that more,” says Mendicino, noting the projected surplus from this year will put the city’s wastewater reserve fund well over what’s considered healthy.
He says some of that money could be used to help pay for wastewater projects.
“That’s money we don’t have to borrow. So, you’re saving the taxpayer money that way,” says Mendicino. “I’d be more supportive of something like that as opposed to looking at offsetting operating with the surplus.”
Council heard this week a projected surplus of more than $900,000 from last year – if tucked away for a rainy day – would bring the city’s wastewater reserve fund up to about $3.2 million, while increasing its water reserves to a little more than $600,000.
Just over $500,000 of the projected surplus is related to water and would be directed toward the associated reserve, while a little more than $400,000 is related to wastewater and would – likewise – go to a related account.
When it comes to wastewater, reserves would exceed the recommended target of between $1 million and $1.5 million. But for water, they would remain at far less than what’s considered healthy – between $1.3 million and $1.9 million.
That’s a key reason there was agreement around the table this week that the city should stick this year with the existing 50 per cent fixed/50 per cent variable billing structure for metered water. Council was told that the water reserve could be depleted if consumption significantly dropped due to weather or some unforeseen circumstance.
Weather, for instance, was a key factor leading to the projected surplus from 2018. A dry summer saw higher-than-anticipated consumption from June through August.
It was, however, also a key contributor to a year-end deficit of more than $500,000 in 2017, when fewer residents watered their lawns and gardens due to heavy rainfall.
Staff is recommending that council look to wastewater reserves should it decide – as at least one member is advocating – to use a portion of the surplus from last year to offset this year’s water and sewer operating budget. Although funds can be transferred between accounts, council was told legislation requires that the money be repaid with interest.
Staff have recommended against using surplus dollars to offset operations, warning it will create a shortfall in the 2020 budget.
But, as chairman of council’s engineering environment and works committee, Coun. Mike Anthony has called on staff to bring forward a budget that includes $216,000 of the surplus to help reduce costs. The move would see the average annual bill decrease by $7.56. But it does not appear to have much support around the table.
And, an amendment adjusting the budget to exclude the use of the surplus dollars is expected to be tabled when it comes forward for approval next week.