Regional district eats away at its surplus to balance budget

The Strathcona Regional District’s surplus has shrunk this year as a result of directors trying to stay away from overtaxing its constituents.

Dawn Christenson, the regional district’s finance manager, told the board last week that the corporation’s accumulated surplus is down 1.8 per cent over 2014.

She said a major contributing factor was that in 2015, the regional district spent really close to its budget estimates for the year.

“In 2015 we got closer to what was budgeted than what we’ve done in previous years,” Christenson said. “We have spent kind of exactly what we budgeted.”

Area D Director Brenda Leigh said lower tax rates also played a part.

“We’ve been trying to not build in structural surpluses to our budget and not tax more than we need to,” Leigh said.

The problem, Leigh said, is that it doesn’t leave much wiggle room for major construction projects that sometimes come in at a much higher price than anticipated because of fluctuations in the market and the Canadian dollar.

“We have not been able to predict costs,” Leigh said. “It really behooves us to recognize the economy is going to dictate to us how much we’re going to have to spend to replace this hard infrastructure; we need to build in a contingency. The unpredictability of the market is affecting us.”

Christenson agreed that it would be to the board’s benefit to look at its reserves more closely.

“We do need to think more strategically about our long term asset plan,” Christenson said. “When do those assets need to be replaced and when are we going to do that?”

In 2015, the regional district’s assets included contributed parkland in Area D, a fire truck and emergency generator on Cortes Island, the Maple Park community garden, as well as vestibule improvements, ice resurfacer, fitness equipment and a scissor lift at Strathcona Gardens.

But major infrastructure, specifically Strathcona Gardens, still needs significant improvements to increase the value of the corporation’s assets.

The regional district’s debt load is low, down 26 per cent over 2014, but that’s because it hasn’t made significant investment in its infrastructure. MNP’s Brad Piercy,who presented the regional district’s audit findings to the board at its May 11 meeting, said as a result, the regional district has the lightest debt load among its peer group of nine comparable regional districts.

“You have the least amount of debt of any of the regional districts because you haven’t replaced any assets yet,” Piercy said.

The regional district’s total long term debt sits at $579,000 which is down $205,000 from 2014.

Christenson said the regional district is projected to retire most of its debt by 2019 unless new debt is issued to replace its assets.

“While our fiscal health is satisfactory, we have some work to do when it comes to strategic use of our surpluses.”

In 2015, the regional district generated $11.4 million in revenue, which was two per cent under budget. Total expenses (including amortization) were $11.8 million, up 10 per cent from 2014.

The regional district saw a decrease in net financial assets of $109,000 and experienced an annual deficit of $478,000.