HomeMy WebLinkAboutTR-30-81 Memorandum
TO: Chairman and Members of the Finance and Administration Committee
FROM: Klaas Degroot, C.G.A. , Treasurer
DATE: April 24, 1981
SUBJECT: Policy on Surplus and Deficit
ITEM: TR-30-81
Recommendation:
"That a policy be recommended to Council whereby any operating
surplus or deficit be paid to or drawn from Working Capital Reserve. "
"That the size of the Working Capital Reserve be allowed to float
with the target limits of 5% to 10% of current years total tax
billing. "
"That a by-law be prepared to accomplish same. "
Report:
The policy proposal is presented to achieve some consistancy in our annual
budget process. By that I mean this proposal would allow us to budget from a
break even position each year regardless of the results of the previous years
operation.
Each year municipality wi1.1 have either a deficit or a surplus and under the
present system this has a direct impact on the current years budget and taxes,
The proposed policy would eliminate the annual fluctuation in the mill rate
caused by this application of surplus and deficits.
Experience has shown that over a long period of time surpluses will be larger
than deficits. This method would allow the building up, or at least maintain the
working capital reserve in position in current dollars.
Presently, the working capital reserve has a balance of $400,000, the level
at which it was established in 1974, the escalation of monetary values in recent
years has rendered the reserve inadequate for current operations.
K. Degroot.
R81-SD-1
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