City service cuts shrink the 2012 budget shortfall

The City of Campbell River's budget deficit has shrunk by a million dollars.

The city’s budget deficit has shrunk by a million dollars.

Going into budget planning, the city faced a $3.6 million budget shortfall for 2012.

As of March 9, that deficit stands at $2.4 million.

The shrinking deficit came at the expense of several service cuts council made at its Feb. 28 financial planning meeting.

“Council has worked hard to obtain public input about the current services provided, options about possible service reductions or elimination and has debated both of these topics extensively,” said Laura Ciarniello, the city’s manager of corporate services.

“The decisions made over the last few finance committee meetings about services provided and the levels at which these services are delivered have resulted in a framework for the 2012 operating budget.”

If the budget deficit stands at $2.4 million and if that deficit was borne solely by residential taxpayers, taxes would increase by 16.04 per cent, the equivalent of $190.94 per year for the average household.

To pare down the budget, council eliminated grass trimming and manual mowing in neighbourhood parks and tot lots; reduced the horticulture budget by 25 per cent; reduced the $26,000 Communities in Bloom budget to $2,000; decreased maintenance and repair levels on city buildings by 13 per cent; and deleted skate board park hosts among other things.

Council also chose to fund Centennial Pool ($184,735 in operating costs) with the gaming reserve, which receives $600,000 annually from the provincial government related to casino revenues.

Ciarniello said city staff are waiting for direction from council regarding a long-term policy for using the city’s reserve (savings) funds.

She acknowledged council has already discussed the importance of not relying on those reserves.

“One of the key principles was that the city could rely on reserve funds to balance the budget in 2012, 2013 and 2014 if required, but that by the year 2015, there would be no reliance on reserve funds and that revenues from taxation would be sufficient to fund the expenses needed to provide services to the citizens.”

Of particular concern is the gaming reserve.

Ciarniello said while it is replenished on a consistent basis that could change if the provincial government alters the funding agreement or if there is a change in operations at Chances casino.

Staff recommended council make a policy decision surrounding the use of the gaming reserve funds at its financial meeting Tuesday night after the Mirror went to press.

“Staff is proposing that creating a policy that states 50 per cent of the annual contributions to the gaming revenues be used for ongoing general operation support and 50 per cent be used to fund projects,” Ciarniello said.

“The 50 per cent of annual contributions would equate to approximately $300,000 or two per cent of residential taxes.

It is a common practice among many municipalities to use gaming revenues in this manner.”

Meanwhile, council also has $536,976 in its General Revenue Fund surplus to work with.

The money is set aside to make up the lag time between when taxes are collected and when capital projects are funded through third party grants as there is often a lengthy delay between when the work is completed and when the grants are received.

It’s also used if the city needs to borrow funds from the Municipal Finance Authority as there is also often a lag time of up to six months between when the application is made and when the funds are distributed.

Ciarniello said council should leave the accumulated surplus in the General Revenue Fund instead of applying it to the deficit in order to reduce the cash-flow risk throughout this year.

City council will continue to craft the budget during financial planning meetings scheduled last night and March 27.

The five-year financial plan is slated for adoption by council at its meeting on May 1.