Despite facing a number of challenges, the City of Estevan managed to finish the 2012 financial year with a surplus.
The audited financial statement for the past year was presented at the Aug. 14 regular meeting of council by Byron Mack of MNP. The City finished the year with a surplus of $1.035 million, which was a vast improvement over 2011 when they posted a deficit of $848,815.
While the surplus is obviously welcome news, the City still has many financial hurdles facing it.
The report indicated that as of Dec. 31, 2012, the City had a bank indebtedness of $11.37 million. It was also carrying a long-term debt of $23.77 million.
"The big number on the financial statement is definitely that bank indebtedness," Mack said. "The line of credit or overdraft as you like to call it increased significantly in (2012) going from a position of $3.2 million as a liability, to $11.37 million as of year end.
"You go through the numbers and this is the number that changes the most within the net financial position within the City. The operating fund was used to operate and fund a lot of the capital additions within the City."
Mack added that in 2012 $15.5 million was spent on tangible capital assets, with $11.8 million of that total going to infrastructure. The other large expenditure was the T-Rex fire truck that was purchased for the Estevan Fire Rescue Service.
"Aside from the fire truck which was purchased by way of a capital lease, everything else was self-funded by the City. Everything else was funded by the bank indebtedness and the general operations of the City. That really drives how the overdraft goes from $3.2 million to $11.37 at the year end."
Mack noted that practice was scrapped by the City after MNP made a number of recommendations following a separate audit the accounting firm conducted earlier this year.
"The projects now are accounted for through different funds so you can properly track long term projects funded through long term financing and shorter term projects through the general operating account."
Overall, the City finished the year with total revenues of $28.40 million, which was up by almost $3 million from 2011. Expenses saw a similar rise, going from $26.28 million in 2011 to $28.19 million.
Mack said the bulk of the revenue increase came from events at Spectra Place, although he noted that expenses at the facility were around the same level.
"It isn't run for a tremendous profit," Mack said.
Mayor Roy Ludwig said due in large part to the recommendations made by MNP, he feels the City has taken a number of positive steps forward that will benefit Estevan in the long run.
"We needed those initial steps to help us turn the corner and now, along with those steps and continued diligence with our new City treasurer working closely with MNP, we have complete confidence that we will get our financial house in order," Ludwig said.
"We understand and we are aware of the fact that we have serious debt. Is it unmanageable? It is not. We are working very hard and we have every confidence we will get our debt level down to a more respectable level, and within a manageable time I believe we should be sitting fairly well financially."
