At their July 10 meeting, Meaford council was presented with the annual auditor's report of municipal finances, and they heard that 2016 was another good year for the municipality.
Traci Smith of BDO & Company, which conducts the annual audit of Meaford's finances, told council that long-term debt is down, cash on hand along with long and short term investments are up, and the municipality saw an operating surplus of just over $420,000 in 2016.
“Overall the municipality had a strong year financially with an operating surplus of $420,000, the municipality is slowly increasing their net position by paying down your debt, and you have been investing in your infrastructure,” Smith told council.
According to the auditor's report, the municipality paid down $887,736 in debt in 2016, while at the same time reserve funds, which had been drained in 2010 in order to rectify accumulated operating deficits of $3 million, continue to be replenished. In the last five years, Meaford's long-term debt has decreased from $10.66 million in 2012 to $7.4 million at the end of 2016. In that same period, Meaford's cash on hand, along with long and short term investments, has increased from $4.8 million in 2012 to nearly $9 million at the end of 2016.
As a result, Meaford's net debt has dropped from $9.2 million in 2012 to just over $1 million at the end of last year.
Meaford Treasurer Darcy Chapman told The Independent that the audit report also shows a significant increase in infrastructure funding.
“For two straight years now the municipality has invested significantly more in capital assets than the annual depreciation. This is a good news story because it means we are starting to invest more in rehabilitating and replacing assets than has ever been done in the past, which will only help to maintain and strengthen the corporation's overall infrastructure in the future,” said Chapman.
Chapman noted that the 2016 operating surplus was primarily due to savings realized in winter roads control.
“The surplus was made up primarily from savings in winter control and fleet due to the type of winter conditions we had, $56,000 that wasn't needed for the indoor pool partnership as a deal couldn't be made with Brookside Condo, coupled with very strong building department revenues. These three items alone make up more than $360,000 of the $420,000 surplus. The remaining amounts come from small savings throughout the organization,” Chapman explained.
When asked how the $420,000 surplus from 2016 will be used, Chapman said that it is up to council.
“Council will need to provide further direction at a later date as to where the surplus should be allocated. My thought will be that it goes into a reserve for reallocation to projects during 2018 budget deliberations, as attempting to spend it at this stage in 2017 would be difficult, given the need to tender a project worth $400,000,” said Chapman.
Members of council were pleased with the audit findings, and had few questions for the auditor, though Councillor Shirley Keaveney asked if the auditor was comfortable with Meaford's current reserve fund levels.
According to the auditor's report, “The Municipality of Meaford held reserves equivalent to 46.8% of 2016 (2015 – 39.42%) expenses or 65.56% of 2016 (2015 – 59.03%) own purpose taxation. Using information from the Financial Information Return, for all municipalities within Grey, Bruce, Dufferin, and Simcoe, the average reserve level was 56.73% of 2015 expenses or 99.69% of 2015 own purpose taxation revenues.”
Smith told Keaveney that while Meaford is still below the average of municipalities in Grey, Bruce, Dufferin, and Simcoe counties, the municipality is in good shape.
“You're slightly below the average of where other municipalities are, but not a significant amount, so you do have fairly strong reserves. Can I give you a number of what the reserves should be? I can't. Every municipality is different, every municipality is in a different stage of where they are in their capital asset management plan, so my advice and recommendation to council is that you really do need to make sure you're monitoring that long-term capital management plan so that you don't have big spikes in your tax rate or your borrowings,” Smith advised.