Meaford council received a report from staff during their Monday, June 13 meeting which estimated the municipality’s 2021 operating surplus to be $321,000.
The 2021 surplus is slightly higher than the $310,000 operating surplus the year prior, but the primary reason identified by staff for the surplus is the same; budgeted projects which were not undertaken.
“The 2021 operating surplus after the end of year transfers is estimated at $321,000. Most of the surplus is from operating projects not undertaken and the on-going Official Plan Review process,” staff advised council during Monday’s meeting. “It is recommended that $42,000 be placed in the planning studies reserve to complete future planning projects or to cover unforeseen costs related to the Official Plan. The remaining is recommended to be placed in the General Infrastructure Reserve to fund increased costs of products such as fuel and steel and other Infrastructure projects.”
The 2021 budget included funding for the Official Plan Review, however only a portion was completed. The Official Plan is expected to be completed in 2022. Staff noted that for both 2021 and 2022 a portion of the review is covered by Development Charges.
Staff advised council that, aside from the $42,000 for the Official Plan, the remainder of the 2021 surplus should be allocated to the General Infrastructure Reserve Fund.
“It is recommended that the Surplus identified for the Official Plan Review should be allocated to the Planning Studies Reserve Fund be used for future studies or unforeseen costs such as an appeal or the Official Plan,” staff explained. “As a majority of the Surpluses relate to Contracted Services and Infrastructure staff recommend the balance of the surplus, estimated at $279,000, be allocated to the General Infrastructure Reserve Fund for future projects. It should also be noted that projects or contracts are experiencing higher costs in 2022 than anticipated, which the surplus could be used to fund.”
Earlier in Monday’s meeting it was noted that Meaford’s once depleted reserves have been replenished over the past decade, and now amount to some $22 million.
Staff reminded council that the major difference between Reserves and Reserve Funds is that all earnings (i.e. interest) from the investment of Reserve Funds must be allocated to, and form part of, the Reserve Fund, while the earnings from Reserves is allocated to the operating budget as investment revenue.
The Municipality of Meaford currently has 52 reserve and reserve funds totalling $21.88 million as of December 31, 2021.
There are two types of Reserve Funds, Obligatory Reserve Funds and Discretionary Reserve Funds.
An Obligatory reserve fund is created when a provincial statute requires that revenue received for special purposes be segregated from the general revenues of the municipality. Obligatory reserve funds are to be used solely for the purpose prescribed for them by statute.
Discretionary reserve funds are created under Section 417 of the Municipal Act, 2001 (S.O. 2001, c.25) through by-law. Discretionary reserve funds are established whenever a municipal Council wishes to earmark revenues to finance a future expenditure for which it has the authority to spend money, and to set aside a certain portion of any year’s revenues so that the funds are available as required.