Sechelt council is looking at a deficit of $359,265 in their 2013 operating budget that will likely need to be filled by taxation, as well as a shortage of more than $4 million in the preliminary capital budget this year.
Interim chief financial officer Tim Anderson presented the preliminary operating budget to council March 13 and the preliminary capital budget on March 20. The operating budget showed expenditures for 2013 outweighing revenues by $359,265, in large part due to a $278,827 drop in revenues for permits and fees this year as well as a loss of $103,376 on return of investments, Anderson said.
The loss on return of investments was due to about $1 million worth of sewer development cost charge funds that were withdrawn for the new sewage treatment plant.
A drop in building starts this year also substantially decreased revenues for permits and fees.
"You've got to realize, though, we've come off a pretty big high. Last year the Watermark got rolling and some other subdivisions and it's falling off now," Anderson noted.
In 2012 council also withdrew more than $1 million from surpluses to pay for things like the Sechelt golf course takeover, geotechnical issues at Concordia Seawatch and repairing storm damage on the Trail Bay waterfront.
For that reason, the District plans to put $500,000 back into the reserve fund this year. Currently there is about $1.9 million in the statutory reserve account.
The $500,000 payment could be decreased to help offset the deficit and ease the load on taxpayers this year, but having the money available for future capital works is important, according to the District.
If anything unexpected comes up on the capital side, such as emergency road repairs, the surplus is the only place to go for money, Anderson said.
A municipality legally cannot have a deficit, so cutting somewhere or taxing residents are the only options.
Anderson said raising taxes by one per cent would generate about $70,000 for the District.
Council will need to decide where to cut or how much to tax residents by May 1, which is when the District's five-year financial plan has to be adopted and sent in to the province.
Currently staff are working on rationalizing the capital needs of the District in order to help council make some tough decisions on that front.
Staff in each department compiled their lists of needs/wants and the total came to $13,487,000; however, there is only $9,469,744 of funding available for capital projects in 2013.
Council asked for help from staff deciding where to cut, and Anderson said he recently held a "rationalization meeting" with department heads to help prioritize their needs, wants and wishes. A report on that meeting will come to council April 3 for more discussion.
"We're taking the opinion that if we can't get grants for these newer type projects like the airport and industrial park, if we can't get financial help from outside in the form of grants, they just won't go ahead," Anderson said. "We're basically saying if we don't have the funding in place and we don't have the grants we're not going to go and hang everything out on the taxpayer. We're going to work within our means."
The biggest cost pressure on the capital side is the new treatment plant, which will see $7,910,000 paid out this year. About $7.5 million will go toward the Maple Reinders Inc. contract with $140,000 going to pay for public works relocation costs and $250,000 to be paid to a project supervisor.
Anderson said that money has already been secured. A total of $6,520,000 in funding for the project is coming from grants, $1 million is coming from development cost charges and $390,000 is coming from operating reserves in 2013.
Further grant and sewer surplus money will be spent on the $22.4-million wastewater treatment project in 2014 and the district will need to borrow at least $2.5 million to pay the rest of the bill.
The wastewater expenditure figures should come forward in the five-year financial plan, which will be compiled in April.
Council will discuss the operating and capital budgets further at their next budget meeting scheduled for April 3 at 2 p.m.
