Latest News

Councillors: Depleted reserves not a concern

By Joel Wittnebel/The Oshawa Express

The city’s savings have taken a serious hit in 2016, the majority dropping by hundreds of thousands of dollars, and others millions as the city attempts to maintain aging infrastructure while also pouring funds into new projects. Despite the serious loss of savings, councillors say they are not concerned.

“Reserves go up and down,” says Mayor John Henry, pointing to the large amount of construction and other activities currently ongoing in the city.

“As long as we keep putting money into our reserves at budget time and we’re conscious of what goes on in the day-to-day operations of the city. It’s important to remember, it’s not about building a building – it’s the maintenance of that building.”

According to a recently released report, of the city’s 38 reserves, 26 of them have seen a decline in 2016. And while some cash stores have seen a slight move further into the black, they are small in comparison to those seeing moves in the opposite direction.

The largest drop is seen in the city’s roads reserve, funded through development charges. The reserve had a balance of more than $16 million at the beginning of the year. However, due to more than $16.6 million in commitments and only about $4.3 million in projected development charge revenues, the balance at the end of March fell to under $4 million.

With the exception of the city’s Administrative Growth Studies reserve, the remaining five reserves funded by development charges have all dropped in the first quarter, the smallest hit coming from the Fire Protection Reserve. Already in the red at the start of the year for more than $300,000, that number has increased to more than $800,000.

Overall, those reserves that decreased over the first four months of the year did so at an average of almost $2.1 million, while the 12 reserves that saw a bump in funds increased by an average of nearly $115,000. The largest increase was seen in the Planning Act Land Purchase reserve, which jumped $229,851, followed by the Parkland-Open Space reserve, which increased $103,412.

For Councillor Nancy Diamond who also chairs the city’s finance committee, the drop in funds is slightly concerning, but is a byproduct of a growing city.

“If we compare to other municipalities, we are low,” Diamond admits. “However, in the financial strategy, we have made the specific goal to increase those reserves to give us a better base.”

And that is something Diamond has been working at for years. Stopping the practice of putting funds into reserves at budget time, only to see them flow right back out again throughout the year is addressed in the financial strategy approved last year.

“We were doing flow through,” Diamond says.  “We are now doing better at getting those reserves built up.”

Henry also notes that in the coming years, the city’s books will be in much better shape as the city pays off some of its larger debts.

“The amount of money that frees up in our baseline budget can help to augment some of those reserves down the road. So we have significant relief in 2018 and 2023 – there’s a lot of relief as some of the big projects are actually finished and paid for,” Henry says.

The city also took a step during this year’s budget to add substantial contributions to the city’s airport reserve to fund future capital projects, as well as creating a reserve for the GM Centre to replace many of the building’s aging assets down the line.

“I think as some projects come off and some come back on, like the airport and the GM Centre, that it’s important to put money aside for those rainy days,” Henry says.

For Diamond, sustainable financials are a “long-term goal,” and council is currently taking the steps to improve.

“It’s like a ship – you can’t suddenly change direction,” Diamond says.  “They’re small steps that lead to a stronger financial community.”