The Strathcona Regional District may have to borrow money in order to pay some of its bills over the next few months.
While the funds to meet its obligations do exist in the 2017 budget, the regional district won’t actually receive that money until August, which could potentially leave the corporation in a bind.
At a board meeting last week, regional district directors gave its staff the authority to borrow up to $5 million, an amount that Financial Services Manager Dawn Christenson said will meet the immediate need and will sufficiently provide for any unforeseen shortfall.
“Put quite simply, it would allow the regional district to have a line of credit, if you will, capped at $5 million to use these funds to pay bills that become due before we are in receipt of the tax requisitions,” Christenson said. “The expected demand for cash flow from now until August 1, 2017 is estimated at a total of $1.5 to $2 million net of anticipated revenue.”
Typically, monthly net cash flow is a draw of approximately $600,000 to $800,000 but the months in which property taxes are received are exceptions.
To that end, Christenson said she expects that the total cost of borrowing would not exceed between $2,500 and $3,500 over a two-month period, which is less than what the regional district ended up having to borrow last year.
“In 2016, the regional district borrowed just under $1.3 million against its revenue anticipation borrowing bylaw at a total cost of just over $2,000,” Christenson said. “The regional district has not often drawn on its authorized revenue anticipation borrowing bylaw in the last five years, however as unrestricted cash surpluses diminish, the need to access borrowed funds increases.”
She said that demands on the regional district’s cash flow are relatively consistent from month to month throughout the years, but the amount of cash received each month is not. The regional district receives the bulk of its revenue on the legislated property tax deadline of Aug. 1 each year.
Property taxes are the regional district’s main source of revenue, however, other significant sources include user fees at Strathcona Gardens, utility fees and grants.
The regional district is expecting to bring in $21.3 million in revenue this year, which includes $11 million in property taxes from both electoral area and municipal taxpayers.