HomeMy WebLinkAboutTR-50-93 THE CORPORATION OF THE TOWN OF NEWCASTLE
REPORT
Meeting: GENERAL PURPOSE & ADMINISTRATION COMMITTEE File#
Date: June 7, 1993 Res. #
Report#: File By-Law#
Subject:
TRANSFERS TO RESERVE & RESERVE FUNDS
- YEAR END 1992
Recommendations:
It is respectfully recommended that the General Purpose and
Administration Committee recommend to Council the following:
1 . THAT report TR-50-93 be received;
2 . THAT the transfers to the Reserves/Reserve Funds
identified in TR-50-93 be endorsed;
3 . THAT the above recommendations be approved forthwith.
BACKGROUND & COMMENTS:
1.0 Annual Report
1. 1 With the completion of the 1992 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 standard year end transfers are the following, made
to cover approved 1992 budget items which were incomplete at
December 31, 1992 but anticipated to be used in 1993 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.
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TR-50-93 Page 2
a) 2900-26-X Professional Fees Reserve, OHAP R/F & $349,332
5001-9-X CIS Lot Levy R/F transfer of
5001-35-X unexpended 1992 Capital to Courtice
/5001-17-X Community Complex R/F.
b) 7005-X-247 Clerk's - Consulting transfer to 41650
/2900-26-x Professional Fees Reserve.
re: Municipal Code
c) 2900-5-X Tax Write Off Reserve contribute over 18,746
/7007-X-252 budget value for taxes written off and
approved by Council 1992 .
d) 7710-X-X Tourism/Economic Development-transfer 24,010
/2900-17-X to General Capital Reserve for draw
down as appropriate in the 1993
Economic Development initiative.
Unexpended funds to be returned to the
Reserve Fund for Economic Development.
e) 7702-X-247 Planning Admin. - Consulting transfer 50,780
/2900-26-X to Professional Fee Reserve Re: Town
of Newcastle Commercial Hierarchy
Study, Economic Development Study,
Bowmanville Central Area Study, and
C.A.U.S.E. Study.
f) 7603-1-X Park facilities transfer to Parkland 25,272
/5001-7-X R/F of unexpended funds relating to
renovations at Bowmanville Public
Works Yard for the Parks & Cemetery
Depot as approved in report CS-27-92 .
g) 7608-3-403 Library unexpended 1992 Capital 5,000
/1110-171-X transfer to Courtice Library Reserve
fund.
re: Western Library Branch Book
Return Drop Box.
h) 5001-39-X Libraries Lot levy transfer to 60,000
/5001-18-X Courtice Library Reserve Fund.
re: Western Library Branch Collection
Building & Planning Fees .
(inter fund transfer only from one
Reserve fund to another)
i) 2900-14-X Fire Department Equipment Reserve 20,000
/7102-5-173 contributions . re: the new
requirement by Ministry of
Transportation of annual safety checks
and certifications on emergency
vehicles, effective 1992 .
TR-50-93 Page 3
............................. .............7,1111,...............-
... ...... ........ ........ ..
a ......
:X.4::: .......
.............
SP
ER
..........
..... ....... .......... X.y ....... X:
J ) 7708-X-X LACAC Committee transfer to General 2,455
/2900-17-X Capital Reserve.
re: completion of consulting and
promotional material
k) 7007-X-298 Unclassified Admin. - Contingency $ 1,541
/2900-17-X transfer to General Capital Reserve.
re: Green Committee waste reduction
projects as approved by Council
Resolution #C-495-92 .
1) 7007-X-231 Unclassified Admin. - Conferences and 10,985
7007-X-233 Staff training to General Capital
/2900-17-X Reserve. re: training programs
scheduled in advance of next year's
budget.
m) 7009-X-247 Computer Services - Consulting transfer 1,070
/2900-26-X to Professional Fees Reserve for
completion in 1993 of 1992 projects .
n) 7007-X-298 Unclassified Admin. - Contingency to 25,000
/5001-17-X Courtide Community Complex Reserve Fund
re: Allocation of seed monies for
conducting a fundraising feasibility
study as approved by Council Resolution
11 #C-516-92
2 .2 The transfers identified have been reflected in the financial
statements for the year ended December 31, 1992, and the costs have
been captured in the appropriate general ledger accounts.
3.0 1992 Year End Surplus
3. 1 Although the economy was in a recession in 1992, the Municipality
has been fortunate to be able to realize a surplus through revenue
gains in conjunction with close monitoring of all expenditures.
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 and by lower than budgeted tender awards due to
a more competitive market in this economy. For the most part the
revenue gains account for the beneficial surplus position that the
Corporation is at for the year ended December 31, 1992 .
3.2 Revenue:
The major areas contributing to the surplus are as follows:
• Supplementary taxation - municipal portion over and above budget
taxation revenue of approximately. . . . . . . . . . . . . . . . . . . . . . 165,000
TR-50-93 Page 4
• Outstanding taxes are higher due to the economy which results in
higher penalty & interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408,000
• Rents, Concessions and miscellaneous revenues of various
Departments higher than anticipated due to increased facilities use
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,000
• Building construction value realized was in excess of budget as
a result of the continued growth within the Town combined with
significant Ontario Hydro construction 125,000
• Interest income was significant due to the prior year's surplus
available for investment for the entire year plus the garbage
rebate combined with the early passage of the budget allowing the
reserve fund contributions to the general fund early in the year,
all invested at higher interest rates than anticipated. . . 176,000
Expenditures :
• Underexpenditures in various departments, affecting areas such as
delayed filling of vacant positions in Planning (Plans Examined) ,
Public Works (Labourer & Light Equipment Operator) and Treasury
(Deputy Treasurer) along with a conscientious effort to reduce
spending in many operating accounts throughout all departments in
1992 account for the balance of the 1992 year end surplus
situation. The reductions in these expenditures have a spin off
effect to other associated accounts such as benefits, travel etc.
TOTAL $1,325,000
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 In addition, due to the current economic climate, many of the
surrounding municipalities are concerned with the level and rate of
increase in outstanding taxes receivable which, if not realized
could have a severe impact on the financial position of the
municipality. The level of outstanding taxes for the Town of
Newcastle is in the middle range in relationship to the area
municipalities . The 1992 year end increase is 30% over the
outstanding balance of taxes receivable for 1991.
3.5 The completion of the 1992 year end financial statements reveals an
accumulated surplus from current as well as prior years of
approximately $2,325,000. This surplus has resulted in part from
not having to use the previous year's surplus of approximately
$700,000 as identified through the 1991 year end transfers report j
TR-39-92 as being available for application to the 1992 budget.
Due to the reasons listed above, which resulted in significant
revenue savings and expenditure reductions amounting to
approximately 1,300,000, this surplus was not used in 1992 in its
entirety and has therefore been rolled over into and included in
surplus available for the 1993 a4d 1994 mill rate.
TR-50-93 Page 5
3.5 The surplus is summarized in approximate values as follows:
1992 Budget surplus not used due to savings 700,000
1992 Revenue realized/expenditures reduced 1,325,000
1992 Allocation to roads (TR-39-92) not required 300,000
1992 Year end surplus per Financial Statement 2,325,000
1993 Application to budget mill rate (1,000,000)
1993 Surplus available for allocation $1,325,000
4.0 RECOMMENDED ALLOCATION OF SURPLUS
4. 1 The recent Provincial legislation, the Development Charges Act,
required that a significant liability be attributed to the
municipality, and it's existing residents, to support
infrastructure costs as identified in the ten year capital works
program through the Development Charge Policy Report. As in the
prior year, it is recommended that a portion of the unallocated
surplus be earmarked for transfer into the Reserve Fund for
Municipal Capital Works to address these future requirements .
4.2 The 1993 Provincial Budget and the Provincial Capital Expenditure
Control Plan for 1993 has identified additional impacts on the 1993
Budget, however, as yet we have not received notification of the
final value. These additional costs that have been identified to
date can be summarized as follows:
0 Unconditional grants reduction 110,000
• Conditional grants - roads 50,000
(estimated from the revised
policy by M.T.O. )
• Social Contract - unknown to date -
Preliminary Impact 160,000
- Expenditure Control Plan
• Provincial Sales tax applied to:
• Insurance premiums
- Payroll, estimated 40,000
- Liability, etc . 25,000
65,000
Preliminary Provincial Impact $2251000
In light of the above and in anticipation of further impact from the
social contract issue, it is recommended that $200,000 of the surplus be
transferred to the Working Funds Reserve. These funds would then be
available for use to offset operating requirements for 1993 if the
budget as passed by Council in March 1993 is not able to absorb the
impact through expenditure savings (ie. contingency allocation, Deputy
Treasurer maternity leave being accommodated with part time help, etc. )
and revenue gains due to growth, supplementaries etc. To date we have
no official indication of the impact from the Provincial Budget as it
pertains to the areas of tax on sand and gravel, parking lots and the
commercial concentration tax. If financial accommodations are required
to be addressed, they will be the subject of a report to Council at the
appropriate time.
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TR-50-93 Page 6
4 .3 The unallocated surplus is recommended for allocation as follows:
• Municipal Capital Works Reserve Fund 125,000
• Transfer to Working Funds Reserve 200,000
• Available for Application to the 1994
Mill Rate through the 1994 Budget 11000,000
$1,325,000
5.0 Final Comments
5. 1 The above has been discussed with the external auditors who concur
that the Town reflects a secure cash position for the current and
approaching year.
5.2 A forthwith approval is requested in order that the auditors can
release the financial statements for publication.
Respectfully submitted, Recommended for presentation
to the Committee
Marie A. Marano, H.BSc . , A.M.C.T. Lawrence E. Kotse f, \,
Treasurer Chief Administrat P,a Officer
MAM/LG/ges
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