More than $10 million in the hole

By Geoff Lee

October 20, 2016 12:00 AM

City scrambles to find solution

The task of balancing the city’s forecasted 2017 budget deficit of $10.5 million could mean cuts in services, sale of city assets and increases in taxes and user pay fees.
The presentation of the budget on Monday as information was the last act of the current mayor and council until the Oct. 26 municipal election.
“It really shows that we’re in a tough time, our economy is hurting a bit,” said Coun. Jason Whiting, who noted the city has been over reliant on land sales revenue to fund operational and capital budgets.
Revenue from city lots sales dropped from about $33 million in 2014 to a projected total of about $4 million for 2017.
The city, though,  is in no mood to have a fire sale on lots.
“We’re not ready to move down that avenue at this point,” said Lisa Buchan, director of business services.
Everything’s on the table for review including a tax increase to balance the budget as required by law.
“We need to be very aware of where we stand in the province in regards to tax rates and how we’re going to fund some of the recreational facilities,” said Whiting.
“Somehow we have to fulfil the operational expenses and some of the capital expenses.”
Buchan said during the boom years, the city relied on land revenues and utilities revenue to fund increases in service levels to keep taxes low, but that’s no longer the case.
A one per cent increase in the mill rate would generate about $227,000 in tax revenue.
“We do need to make some definite deficit reduction strategies so it will be a combination through the generation of revenue and looking at the expense piece as well,” said Buchan.
To balance the budget, Lloydminster residents are being asked to help the new mayor and councillors pick spending priorities by completing an active online survey at www.lloydminster.ca/budget until Nov. 13.
The second draft of the budget will be presented at council on Nov. 28 with the final 2017 budget   submitted to council for approval in December.
“What we are really focused on right now is reducing the deficit and we want to ensure that we look at all strategies related to that,” said Kirk Morrison, deputy CAO.
Morrison said about 50 per cent of the deficit is due to economic factors.
The balance of the deficit,  he said, is due to a previous accounting practice that would recognize capital revenue under the operation budget.
Morrison said the 2017 budget separates the operations and capital budgets as a best accounting practice.
“What we have to be mindful of is strategically financing our capital projects,” he said.
“One of the good new items of this budget is $8 million will be transferred to a capital reserve instead of utilizing those funds as operating revenue.”
He said the city is looking at ways to provide services more efficiently with the bottom line in mind.
One idea is to dissolve the Lloydminster Economic Development Corporation and move its functions in-house to save about $500,000.
The creation of a storm water utility could also save the city an additional $2 million.
“So basically, that would be a user pay system that would encourage us to recover a lot of our costs associated with a utility,” said Buchan.
The possible sale of the former public works shop would also net about $1 million with an additional $1 million cost reduction from a deferred equipment transfer.
Coun. Ken Baker said he needs more time to fully understand how to balance the budget responsibly.
“The saying goes the devil’s in the details—certainly administration and council are faced with some major cutbacks,” he said.
The budget document noted the $4.5 million purchase agreement of the downtown Synergy Credit Union has not been finalized, leaving that to the next council.
The city is also continuing to seek funding sources for a required waster water treatment facility among outstanding capital project issues.

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