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HomeMy WebLinkAboutTR-56-91 TOWN OF NEWCASTLE REPORT File # Res. # By-Law # q/_ MEETING: GENERAL PURPOSE & ADMINISTRATION COMMITTEE DATE: July 8, 1991 REPORT #: TR-56-91 FILE #: StJ&JECT: TRANSFERS TO RESERVE & RESERVE FUNDS -YEAR END 1990 RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That report TR-56-91 be received; 2 . That the transfers to the Reserves/Reserve Funds identified be endorsed; 3. That the following by-laws to establish reserve funds reserves which have been identified as inactive be rescinded: By-law # 90-80 (Enniskillen Reserve Fund) and By-law # 83 -137 (Municipal Grants Policy Reserve) . BACKGROUND & COMMENTS: 1. With the completion of the 1990 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. . . .2 712 TR-56-91 Page 2 2 . Among the standard year end transfers are the following, made to cover approved, 1990 budget items which were incomplete at December 31, 1990 but anticipated to be used in 1991 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. From / To Details Transfer a) 7007-X-403 Arena Demolition - excess funds $ 14,069 /1110-175-X to Debt Retirement Reserve Fund per resolution #GPA-88-91. b) 2900-5-X Tax Write Off Reserve contribute 23,932 /7007--252 over budget value for taxes written off and approved by council in 1991 c) 7702-X-247 Planning Administration - Consulting 65, 109 /2900-26-X transfer to Professional Fees Reserve re Peer Review & Consolidated Hearing. d) 7007-X-238/240 Unclassified Administration- Negotia- 12, 141 /2900-26-X tions & legal matters - to Professional Fees Reserve for continuation of matters initiated in 1990. e) 7710-X-299 Tourism/Economic Development-transfer 71,504 /1110-X-163 to Economic Development Reserve Fund for projects - ie promotional brochure etc . discussed by Economic Development Committee, for completion in 1991. f) 6300-10-X Specific Grants - re Ministry of 45,000 /2900-26-X Tourism & Recreation grant for Leisure Master Plan to Professional Fees Reserve. Project budgeted in 1990 net of grant, with completion in 1991. Project identified in Report CS-10/90. g) 7007-x-405 Clerk's Department - transfer to the 15,500 /2900-17-X General Capital Reserve for 1990 approved Capital Budget items ie. - filing units for records retention /Freedom of Information project - to be expended in 1991. h) 7009-X-247 Computer Services consulting - transfer 17, 155 /2900-24-X to Computer Equipment Reserve for design and development of soft- ware programs - to be completed in 1991. . . .3 13 TR-56-91 Page 3 3. The transfers identified have been reflected in the financial statements for the year ended December 31, 1990 . 4 . The by-laws contained in recommendation #3 to be rescinded were identified through the budget process as being relating to reserves or reserve funds which are no longer required or used and the funds have been built in as contributions to the 1991 budget. The Clerk's Office confirms that there are no related by-laws to be rescinded on the Reserve Funds for Expropriation Proceeds and the Roads Capital Reserve Fund. The reserve funds and their balances were identified through the budget report TR-22-91. 5. The completion of the 1990 year end financial statements reveals an accumulated surplus from current as well as prior years of approximately $1,700,000. This surplus has resulted in part from the previous year's surplus of approximately $450,000 as identified through the 1989 year end transfers report TR 65-90 . The 1990 budget allowed for almost all of the balance, $1,200,000 of the prior year's surplus to be applied to 1991 expenditures through the budget process . In fact, although the economy caused the revenue from the issuance of building permits to be less than budget by approximately $700,000, there were other revenue gains and/or expenditure savings that were able to be realized. Generally these differences can not be anticipated during the compilation of the budget, in part because revenue is predicted more conservatively in case it is not realized, and in many instances expenditures are lowered by taking advantage of economies of scale and seasonal efficiencies. For the most part the revenue gains account for the beneficial surplus position that the Corporation is at for the year ended December 31, 1990 . Some of the areas contributing to the surplus are as follows : • Density Grant was eliminated by the Province in 1990, however the grant was paid in the form of the General Support grant, resulting in an unexpected grant of. . . . . . . . . . . . 150,000 • Ontario Hydro Grant in Lieu was greater than expected due to the start up of generator two. . . . . 140,000 • Outstanding taxes are higher due to the economy which results in higher penalty & interest. . . . . . . . 200,000 • Pay equity was more or less accommodated by the normalization of annual salaries on additional staff which were hired late in the year or were not filled in consideration of the economy which did not require a full draw on contingency. . 250,000 . . .4 / 1 TR-56-91 Page 4 continuation of report on transfers . 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 . General Underexpenditures in various departments, due to reasons outlined above, the most significant of which are: Fire . . . . . . . . . . 65,000 Public Works. . . 100,000 Planning. . . . . . 70,000 5.3 The 1991 budget has applied to the mill rate the best estimate of the surplus which was at the time $1,000,000 ( which included the $450,000 from the prior year) . The 1992 mill rate will therefore have the advantage of the balance of approximately $700,000 to maintain the 1991 tax impact at a continued reasonable level. 5 .4 . 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. Respectfully submitted, Recommended for presentation to the Committee, M Mar , H.B . , AMCT, Lawrenc Ey. Kotseff, asure Chief dmnistrative Officer. MAM/PP 7 r)