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THE CORPORATION OFTHE MUNICIPALITY OF CLARINGTON
REPORT
File # f[){) f:;;-
Res.#0f1t-337-91
By-law #
Meeting:
Date:
Report #:
Subject:
General Purpose and Administration Committee
June 8, 1998
TR-35-99 File #:
TRANSFERS TO RESERVE AND RESERVE FUNDS
- YEAR END 1998
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report TR-35-99 be received; and
2. THAT the transfers to the Reserves/Reserve Funds identified in TR-35-99
be approved.
BACKGROUND & COMMENTS:
1.0 Annnal Report
1.1 With the preparation of the 1998 year end financial statements, there are a number of
routine transfers to Reserves or Reserve Funds that have been approved annually by Council
at or around the time that the year end financial statements are presented to Council. These
transfers are in accordance with Municipal by-laws or policies and practices.
2.0 Transfers
2.1 Among the following are standard year end transfers, made to cover approved 1998 budget
items which were incomplete at December 31, 1998 but anticipated to be used in 1999 for
the purposes they were originally intended. The transfers to Reserves or Reserve Funds
earmark the funds only, and draws on these funds still require adherence to the Purchasing
By-Law, and any projects requiring tenders will be brought to Council for final approval. In
addition, many of the items have been purchased or projects completed at the time of
writing this report, but are recorded here because they were outstanding over the year end.
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TR-35-98
PAGE 2
I. 7007-X-4051 Transfer unexpended tax levy of the 1998 Capital Budget for $15,000
2900-17-X leases to General Capital Reserve for purchase of furniture
IfIxtures and equipment including unanticipated ergonomic
requirements.
2. 7007-X-251, Transfer unexpended 1998 Current Budget for Taxes Written Off $217,400
7007-X 2521 and Assessment Appeals to tax write-off reserve.
29OO-5-X
3. 7007-X-2981 Transfer unexpended 1998 contingency budget to General $161,600
29OO-17-X Capital Reserve for unanticipated items such as fIre negotiations
and other Human Resource impacts.
4. 7004-2-233 1 Transfer unexpended 1998 staff training for Emergency $30,000
2900-17-X Measures to General Capital Reserve for training in 1999. Any
unexpended funds will be used for the purchase of a generator for
the Municipal Administration Centre. Municipal Staff will also
apply for available JEPP funding to be applied towards the
generator purchase. Any unexpended 1999 funds will be
transferred prior to December 31 if necessary for the purchase
of the generator.
5. 7007-X-405/ Transfer funds to the Computer Equipment Reserve to distribute $250,000
2900-24-X current year surplus in order to build up the reserve for the future.
In part to offset advance for fIre dispatch software regarding
Y2K.
Transfer funds to the Fire Primary Response Reserve fund to $100,000
6. 7007-X-4031 distribute current year surplus in order to build up the reserve for
5OO1-5-X the futore.
Transfer funds to the Professional Fees Reserve to distribute $100,000
7. 7OO7-X-4051 current year surplus in order to build up the reserve for
2900-26-X unanticipated legal matters.
8. 7007-X-4051 Transfer unexpended tax levy of the 1998 Capital Budget for $4248
2900-17-X Treasury furniture and fIxtures and Bowmanville Museum capital
items to General Capital Reserve.
9. 7202-X-405 1 Transfer the tax levy of incomplete 1998 Capital Public Works $311,357.97
2900-17-X projects to be completed in 1999 to General Capital Reserve. (ie.
Road Resurfacing, Wellington St., Middle Rd., Sidewalk
Replacement and UnspecifIed Construction)
10. 7613-X-405 / Transfer the una1located 1998 grant bndget to General Capital $7725
2900-17-X Reserve to be applied to 1999 Connnunity Care Grant of$14,000
pursuant to Resolution #C-94-99.
Transfer the tax levy portion of the incomplete 1998 Capital $124,973.95
II. 7009-X-405/ Computer Services software and hardware purchases to be
2900-24-X completed in 1999 to the Computer Equipment Reserve.
12. Object 233 Staff Transfer unexpended 1998 staff development Budget to General $30,000
Development / Capital Reserve for traiuing in 1999.
2900-17-X
13. 7OO5-X-247, Transfer unexpended 1998 Clerk's consulting and Records $6300
7oo5-X-253 1 Retention Budget to Records Maintenance Reserve.
29OO-6-X
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TR-35-98
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14. 7005-1-X/ Transfer unexpended 1998 Volunteer Recognition Program to $1950
2900-17-X General Capital Reserve.
15. 7009-X-247 Transfer unexpended 1998 consulting and software development $10,140
7009-X-259/ for computer services to Computer Equipment - Finance Reserve
for unanticipated Y2K conversion issues.
2900-24-X
16. 7602-X-247/ Transfer unexpended 1998 Conununity Services Consulting to $5000
2900-26-X Professional Fees Reserve to complete 1998 projects ie.
Recreation master plan.
17. 7702-X-405 / Transfer unexpended tax levy from 1998 Capital Public Works $34,698.66
2900-17-X projects - George St, Nash Rd. and Concession Rd. 9 to the
General Capital Reserve to be used in 1999 to complete projects
and any unexpended funds at end of 1999 will remain as surplus
funds in General Capital Reserve.
18. n02-X-405 / Transfer unexpended 1998 Capital Pre Engineering for design to $53,717.23
29OO-17-X General Capital Reserve to be used to offset expropriation, legal,
consulting costs etc. related to Cove Rd. project.
19. 7007-X-405/ Transfer the committed tax levy of the 1998 Capital Treasury $1,207.48
2900-17-X equipment and funtiture to General Capital Reserve to be used in
1999.
20. 7007-X-405/ Transfer funds to the Public Works Equipment Reserve to $250,000
2900-IO-X distribute current year surplus in order to build up the reserve for
the future.
21. 7105-X-405/ Transfer unexpended tax levy of the 1998 Capital Anima1 $8000
29OO-12-X Control vehicle purchase to Animal Control Equipment Reserve
for payment of vehicle in early 1999.
22. 7007-X-405/ Transfer funds to the Community Services Program Reserve to $50,000
2900-13-X distribute current year surplus in order to build up the reserve for
the future.
23. 7OO7-X-405/ Transfer funds to the Building Maintenance and Improvement $100,000
2900-25-X Reserve to distribute current year surplus in order to build up the
reserve for the future.
24. 7007-X-405/ Transfer funds to the Sick Credit Reserve to distribute current $100,000
29OO-10-X year surplus in order to build up the reserve for the future.
25. 7602-X-405 / Transfer unexpended tax levy of the 1998 Capital Administrative $118,189.48
2900-17-X Facilities for Darlington Sports Centre to General Capital
Reserve to complete 1998 Budget items.
26. 7OO7-X-405/ Transfer funds to Municipal Acquisition Reserve to distnbute $100,000
2900-3-X curreut year surplus in order to build up the reserve for the future.
27. 7702-X-405 / Transfer a portion of the unexpended tax levy of the 1998 Capital $1000.00
2900-17-X Planning equipment purchase to General Capital Reserve to be
used for purchases in 1999. (ie. Chair)
28. 7007-X-405/ Transfer funds to Animal Control Equipment and Animal Control $50,000
29oo-12-X, Building Reserve to distribute current year surplus in order to
2900-12-1 build up the reserve for the future.
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TR-35-98
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2.2 In October 1998, Municipal Staff submitted an application to Revenue Canada to change
the GST status for the Courtice Connnunity Centre from an exempt supply to a taxable
supply. Revenue Canada has allowed staff to submit a GST return in December 1998 for
ITC on all the Courtice Connnunity Centre construction costs as well as operating. Once
Revenue Canada reviews and approves the input tax credit for Courtice Connnunity
Centre, the funds received will be used to replenish the Impact/Escrow Reserve Fund.
This reserve fund fmanced costs relating to the Garnet B. Rickard Recreation Complex
that were eligible for Development charge financing but there were insufficient funds in
the Connnunity Services Development Charges Reserve Funds due to the construction of
the Courtice Complex.
3.0 1998 Year End Surulus
3.1 The Municipality has been fortunate to be able to realize a surplus through revenue gains
in conjunction with close monitoring of all expenditures during 1998. These differences
can not be anticipated during the compilation of the budget, primarily because revenue is
predicted more conservatively than expenditures such that if it is not realized, the
Corporation would not be negatively impacted to any great extent. Also in many
instances expenditures are lowered by taking advantage of economies of scale, seasonal
efficiencies and co-operative tendering. For the most part the revenue gains account for
the beneficial surplus position that the Corporation is at for the year ended December 31,
1998.
3.2 The major areas contributing to the surplus are as follows:
Revenue:
. Outstanding taxes remain high due to the economy which results in higher penalty
and interest (Note: some of these properties will be eligible for tax sale) ......$150,000
. Supplementary taxes including payment in lieu higher than budget ....$575,000
. Increase in Official Plan Amendments, Subdivision and Zoning Clearance fees
higher than budget....................................................................................... .$24,000
. EHT, WCB (NEER) AND UIC rate reduction rebates .........................$30,000
. Increase in Building and Plumbing Permits issued....................... .$354,000
. Interest income was higher than budgeted due to conservative budgeting practices
and a more proactive cash management strategy............................................ .$54,000
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Expenditures:
. Underexpenditures in various departments, affecting areas such as delayed filling
of vacant positions in Building Inspection (Chief Building Official), Treasury (maternity
leave), Public Works Department (down time and vacation pay), Community Services
Department part time staff. The reductions in these expenditures have a spin off effect to
other associated accounts such as benefits, etc.
..... ...... ............................ ........ .... ............. ..................... ................................ ...... $ 120,000
. Overall underexpenditure in Public Works Operating Maintenance budget
....................................................................................... ......... ...................... $ 89,000
. Recreation under budget in operating
................................................................................................................... $ 40,000
SUBTOTAL
$1,436,000
Less: Transfer of current surplus to build up reserves and reserve fund
$1.100.000
NET REVENUE OVER EXPENDITURE
$ 336.000
3.3 Historically, the budget process has applied only the known surplus to the current budget
year. This is done due to the uncertainty of the surplus value. until the year end audit is
complete, combined with the concern not to under levy in any given year which could
result in a deficit such as that which the Town found itself in a number of years ago.
3.4 The controllable expenditures met the 1998 Budget targets. However, the revenues were
budgeted even more conservatively than normal due to there being no comparative
baseline resulting from changes legislated by the Province including down loading and
current value assessment.
3.5 Taxes receivable for the current year are considerably higher than previous years due to
Provincial Legislation - ie. Bill 16 and Bill 79. Also the Assessment Office was late in
distributing the supplementary taxes to the Municipalities. Clarington billed
supplementary taxes in early January 1999 with due dates of January 29th and February
lOth 1999. However, due to financial reporting for year end, the supplementary taxes
were recorded in the December 1998 totals for taxes receivable.
3.6 The year end surplus is an accumulation of a number of years surplus and maintained in
part from not having to use the previous year's budgeted surplus draw of approximately
$833,000 as identified in the 1998 Current Budget. Due to the reasons listed above,
which resulted in significant revenue increases and expenditure reductions, the surplus
was not used in 1998 in its entirety and has therefore been rolled over into and included in
surplus available for the 1999 and future tax rates.
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TR-35-98
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4.0 Final Comments
The above has been discussed with the external auditors who concur that the Municipality
reflects a secure cash position for the current and approaching year.
Reviewed by,
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Franklin Wu, M.C.I.P., R.P.P.,
Chief Administrative Officer.
MMlNTILG/cd
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