City de­creases op­er­at­ing line of credit to pre­vi­ous level

Prairie Post (East Edition) - - NEWS - By Matthew Lieben­berg mlieben­berg@prairiepos­t.com

The City of Swift Cur­rent has been able to main­tain a strong cash flow po­si­tion since the start of the COVID-19 pan­demic and there­fore did not have to make use of an op­er­at­ing line of credit with a higher limit.

Coun­cil­lors ap­proved a rec­om­men­da­tion from City ad­min­is­tra­tion at a reg­u­lar coun­cil meeting on Oct. 5 to re-es­tab­lish the lower limit on the op­er­at­ing line of credit.

The cap on the op­er­at­ing line of credit was in­creased from $2 mil­lion to $7 mil­lion at a spe­cial coun­cil meeting on March 27 to en­sure the City’s abil­ity to meet fi­nan­cial obli­ga­tions and to re­spond to any un­fore­seen cir­cum­stances dur­ing the pan­demic.

Coun­cil mem­bers were pleased with the City’s good cash flow sit­u­a­tion and the fact that there was no need to use the op­er­at­ing line of credit.

“Ob­vi­ously en­cour­ag­ing that the City's po­si­tion is in such a state that we're not go­ing to need to rely on th­ese ex­tra funds through a line of credit,” Coun­cil­lor Ryan Plewis said. “So a good news story mov­ing in the sev­enth month of COVID or is it the tenth year it feels like, but a good news story none­the­less.”

Mayor De­nis Per­rault re­ferred to the un­cer­tain sit­u­a­tion early in the pan­demic when coun­cil made the de­ci­sion to in­crease the op­er­at­ing line of credit limit to $7 mil­lion.

“There was so much un­cer­tainty and this ex­ten­sion of our credit line was an­tic­i­pat­ing the un­cer­tainty,” he said. “We gen­uinely did not know what was com­ing and I want to say a huge thank you to the pub­lic, thank you to busi­nesses, and thank you to ev­ery res­i­dent in the city of Swift that although had an op­tion to de­fer their taxes to the end of Septem­ber, what we saw was the ma­jor­ity con­tin­ued to make those pay­ments.”

He also ex­pressed ap­pre­ci­a­tion to­wards the pro­vin­cial gov­ern­ment for pro­vid­ing rev­enue shar­ing and gas tax pay­ments in a lump sum to mu­nic­i­pal­i­ties.

“This al­lowed our cash flow pro­jec­tions to be a lit­tle bit more cer­tain for our com­mu­nity, but for all com­mu­ni­ties across Saskatchew­an,” he said.

City Gen­eral Man­ager of Cor­po­rate Ser­vices Kari Cobler pro­vided de­tails dur­ing the on­line meeting about the im­pact of the pan­demic on the City’s cash flow sit­u­a­tion.

“Over the past six months, cash in­flow has de­creased in recre­ational and cul­tural ar­eas due to the clo­sure of many fa­cil­i­ties,” she said. “As well, many res­i­dents and busi­nesses have taken ad­van­tage of the pay­ment de­fer­ral pro­gram for prop­erty tax and util­ity pay­ments, with no in­ter­est or penalty charges be­ing ap­plied to out­stand­ing ac­counts up to Sept. 30, 2020.”

She added that many of the City’s op­er­a­tional ex­penses were re­duced to off­set the re­duc­tion in cash in­flow. Th­ese re­duc­tions in­clude vari­able over­head costs re­lated to fa­cil­ity clo­sures and pro­gram­ming can­cel­la­tions.

“Spend­ing was also re­duced in other ar­eas to only those costs that were con­sid­ered es­sen­tial to en­sure the level of ser­vice to res­i­dents and busi­nesses re­mained un­changed,” she said. “The City was also able to se­cure long-term debt at a his­tor­i­cally low in­ter­est rate, thereby re­duc­ing debt re­duc­ing costs.”

The City will usu­ally re­ceive the rev­enue shar­ing and gas tax pay­ments in monthly in­stal­ments, but the pro­vin­cial gov­ern­ment’s de­ci­sion to make th­ese pay­ments as a lump sum helped to ease the pres­sure on the City’s cash flow.

Cobler elab­o­rated on the City’s de­ci­sion to de­crease the op­er­at­ing line of credit dur­ing an on­line me­dia brief­ing af­ter the coun­cil meeting.

“Over the past six months our fi­nan­cial po­si­tion and our cash flow po­si­tion con­tin­ued to re­main strong,” she said. “So at this point in time we don't see a need to take the ad­di­tional in­crease to our op­er­at­ing line of credit for­ward into the fu­ture. Of course, if our cir­cum­stances change in the new year, we can al­ways read­dress that, but at this point in time, we felt it was pru­dent that we do re­duce our op­er­at­ing line of credit back to $2 mil­lion.”

She noted that the City was able to de­crease op­er­a­tional ex­pen­di­ture through a care­ful ap­proach to any pro­posed ex­penses.

“Be­fore we en­tered into any con­tracts or we ex­tended our­selves into any li­a­bil­i­ties for con­trac­tors, con­sul­tants, any other pur­chases that we may have in­curred, we def­i­nitely took a keen eye to whether they were es­sen­tial to en­sure that we main­tain that level of ser­vice to res­i­dents and busi­nesses,” she said.

Res­i­dents and busi­nesses took ad­van­tage of the pay­ment de­fer­ral pro­gram, but oth­ers con­tin­ued with reg­u­lar pay­ments and out­stand­ing amounts were also paid be­fore the Sept. 30 dead­line.

“We did see an in­crease in the amount of prop­erty tax and util­ity ac­counts that were out­stand­ing un­til Sept. 30,” she said. “What that told us is many busi­nesses and res­i­dents val­ued the pay­ment de­fer­ral pro­gram that we did put in place ear­lier this year. Many did pay their prop­erty taxes up to Septem­ber 30 and cer­tainly any of those ac­counts that were still out­stand­ing to­wards the end of Septem­ber were paid prior to Sept. 30 or on the due date. So it's a great thing to see. We're thank­ful that the pub­lic was able to do that and take ad­van­tage of the de­fer­ral pro­gram that was in place as well.”

The City will have to sub­mit an ap­pli­ca­tion to the Saskatchew­an Mu­nic­i­pal Board be­fore the end of the year to re-es­tab­lish its debt limit, but the in­ten­tion is to keep this limit at the cur­rent level.

“We're not re­quest­ing an in­crease to our debt limit at this point in time,” Cobler said. “And cur­rently our debt limit is $110 mil­lion, and it does ex­pire at the end of 2020. So we will make an ap­pli­ca­tion to the Saskatchew­an Mu­nic­i­pal Board to re-es­tab­lish that at $110 mil­lion.”

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