Rising U.S. dollar means rise in cost of new fire truck
A new fire truck will cost the city significantly more than it budgeted for due to the decline in the Canadian to U.S. dollar exchange rate.
As a consequence, the city will have to put off its plan to re-furbish an existing 1993 fire truck from this fall until sometime next year.
The new ladder truck was expected to cost $1 million. However, costs rose to $1.225 million, leaving the city with a shortfall of $225,000.
At Tuesday’s council meeting, Coun. Andy Adams recommended council make up the money by taking $75,000 from the capital works plan and $150,000 from the fire reserve which was to be used to re-furbish the 1993 fire truck. Instead, the refurbishment will be put off until 2015 financial planning.
Coun. Larry Samson asked Fire Chief Ian Baikie if that would hamper fire operations.
Baikie didn’t think there would be a problem.
“The intent here is to receive the new truck and once we have that truck in service, to send that (1993) truck off for an extended period of time to be refurbished, in the order of three or four months, and have the truck back by fall 2015,” Baikie said.
The re-furbished truck would then go to Fire Hall No.2 in Willow Point.
Baikie said ultimately the decision on how to make up the shortfall is up to city council.
Dave Morris, the city’s general manager of facilities and supply management, said in a report to council that the cost for the truck went up due to a poor exchange rate, now at $1.13 per U.S. dollar. The Canadian dollar was above par with the greenback in 2012 when the cost was last checked with fire apparatus suppliers in the United States. The return to the PST and GST from the HST in April of last year also increased the tax expense from 5.25 per cent to seven per cent.
Myriah Foort, the city’s finance manager, told council the city is being proactive in making sure it does not find itself in a similar situation in the future.
“Finance has taken some steps to ensure this does not happen again,” Foort said. “We’ve been in detailed discussions with our bank in setting up a U.S. banking account. We have learned from this.”
Council approved purchasing the ladder truck from U.S. company Rocky Mountain Phoenix for $1.225 million.
Baikie said it will probably take about one year to manufacture the truck and the fire department hopes to have the it arrive in June of 2015.
However, he said the fire department’s budget will incur the cost of the truck shortly so that the monies can be held in U.S. funds.
“We want to lock in the U.S. dollar this time so that the cost to our budget would be incurred as soon as possible to ensure our money’s in place,” Baikie said.