Lower land development revenues and debt repayment conspired to keep the City of Estevan in the red last year.
The audited financial statements for 2014 were released at Monday night’s meeting of Estevan city council. The document, prepared by MNP LLP, painted a fairly rosy picture for the City on some fronts.
The City posted a surplus of $1,027,382 in 2014, before provincial and federal capital grant contributions. After the contributions were factored in, the surplus was $1,845,530.
And the City’s net debt, which City treasurer Jeff Ward said is a focal point for municipalities, is now at $31.84 million, compared to more than $34.49 million at the end of 2013.
Net debt is tabulated by looking at assets versus liabilities. In the City’s case, assets were at $8.36 million, while liabilities were at $40.20 million at the end of last year.
Revenues last year exceeded $31.81 million, with taxes and other unconditional revenue ($17.98 million) and fees and charges ($12.22 million) accounting for the vast majority of the income.
But land sales generated just $230,890, which was well below the projected amount of more than $5.827 million.
City manager Amber Smale said the money they projected for the Meadows subdivision and Phase 4 of Dominion Heights didn’t come through. Money for the Meadows came in earlier this year.
“One of the things we’re doing is projecting a little more conservatively on our revenue side,” Smale told the Mercury. “That’s really where it’s coming into play here, is revenues have been projected too high in the past.”
Smale said they’re now to the point where they will budget a low figure for land sale revenues. Any additional money they receive through land development would be a bonus.
“Land development is kind of the wildcard,” said Smale. “If people are building and ready to go, then you get that revenue in there. If things slow down, you don’t. It’s the unpredictable mark, and that’s why we’re trying to be really conservative about what we put in there.”
Expenses were at $30.78 million. Recreation and cultural services ($6.80 million) and transportation services ($6.09 million) were the biggest expense sources, followed by utilities ($5.71 million), general government services ($5.25 million) and protective services ($4.80 million).
When other financial factors were added to the ledger, the City finished $2.65 million in the black for its net financial assets, which translated to the decrease in net debt.
But the number that wasn’t included in the financial ledger was debt repayment. The City spent $5 million in reducing its debt. When that was factored in, the $2.65 million increase in net financial assets became a deficit of about $2.35 million.
Ward said the net debt is the figure that the City is committed to reducing.
“Since the mid-90s or 2000s, that net debt number has been increasing,” Ward said. “We're definitely on the right path. I think the big focus is just living within your means, making sure your capital purchase plan is properly funded, and it can be funded through taxes or borrowing or however council decides in the current year.
“But be realistic about what you can get done during a year, and don’t be too hungry to get things done before you actually have the funding to do them.”
Smale said she expects 2015 will be a different scenario when it comes to the City’s books.
Ward said council has some items in this year's capital budget they are legally obligated to tackle, such as the airport runway resurfacing project that is largely funded by the Provincial Disaster Assistance Program. The runway repairs stem from damage by the floods of 2011.
He looks forward to council and administration being able to work on projects they aren't committed to, and continuing to reduce their debt by a few million dollars per year.
