The City of Estevan posted a surplus in its financial statements last year.
The city’s net debt decreased from $31.84 million in 2014 to $28.42 million in 2015, according to audited financial statements, compiled by MNP Chartered Accounts, that were released during Monday night’s meeting of Estevan city council.
The net debt is tabulated by calculating the city’s total financial assets, which currently stand at $9.94 million, and their liabilities, which are at $38.36 million.
“Our key is going to be reducing net debt,” said Jeff Ward, the city manager and acting city treasurer.
Their total cash was $1.93 million at the end of last year, which was up from $265,301 the previous year. The city also didn’t have an overdraft at the end of 2015, compared to a $1.96 million overdraft at the end of the previous year.
“This is the first year in, I believe, the last five years, we’ve gone in with actual positive cash balances, and not any bank indebtedness,” said Ward.
If they do have an overdraft, then Ward believes, it needs to be for capital projects, and not for operations.
“We’re trying to be cash positive at all times,” said Ward.
The bulk of the liabilities are from long-term debt, which stood at $33.39 million at the end of last year. The figure was up from $32.45 million the previous year.
The city paid back more than $4 million in long-term debt, but they also took out a $5 million loan to pay for the resurfacing of the runways at the Estevan Airport and to purchase some vehicles through their fleet renewal program.
As for last year’s financial statements, the city received nearly $37.78 million in revenues last year, with more than half ($19.07 million) coming from taxes and other unconditional revenue. And while tax revenues increased by more than $1 million from the previous year, Ward does see one looming issue.
“My big concern this year is uncollected taxes from the economy, but that’s going to affect our cash flow, and not our income statement,” said Ward. “It was even high in 2014, and it went up … at the end of last year. I’m really scared of it this year.”
According to the report from MNP, the city had $896,424 in taxes receivable at the end of last year, compared with $673,365 at the end of 2014.
The city received nearly $11.31 million through fees and charges, which was down by nearly $1 million from the previous year.
“We had less off-site development levies because there was less development,” said Ward. “That was the biggest key that was reduced from last year. Our land sales were one account, but our off-site development levies, which come from development, they were higher in 2014.”
The city also received $3.48 million for conditional grants, which included funding from the Provincial Disaster Assistance Program for the airport runway resurfacing; $1.52 million for land sales through sales of the city-owned lots in northwest Estevan; $134,241 through investment income and commissions; and $2.9 million for other revenue.
Expenses were at $31.33 million, with $6.98 million for recreation and cultural services; $6.54 million for transportation services; $5.24 million for protective services; $5.25 million for utility services; $5.21 million for general government services; $1.62 million for environmental and public health services; and $455,738 for planning and development services.
After factoring in provincial and federal capital grants and contributions of $828,857, the city had an annual surplus of more than $7.26 million. Following capital expenses and amortization of $3.59 million, and $255,227 in other expenditures, the city was left with the decrease in net debt of $3.4 million.
Despite the city’s improved financial position, Ward defended the tax increase last year and this year. There are concerns, such as uncollected taxes from previous years, that could change their financial outlook.
Ward hopes they can now start to build some cash reserves.
“We could keep budgeting to zero, but they did that for years, and look what happened financially,” said Ward.
He is also optimistic the city’s net debt can be reduced to $26.5 million by the end of this year, but that will be contingent on collecting taxes that are owing, and having their capital projects meet budget expectations.
