Tonight at our regular council meeting we'll be discussing the results of our 2008 Audited Financial Statements, and what to do with the surplus of $1,461,116.
I know that there are those who will say that any government surplus is a sign of over taxation, so before going any further I feel I should address that point. Firstly although $1.46 million is a big amount if you look at it in perspective it's equivalent to approximately 1% of the total budget (capital and operating budgets totalled $140,133,123 - you can see a pdf of the consolodated financial statements here).
That's pretty tight budgeting and I have to say that any organization that ends the year plus/minus 1% of it's budget is doing pretty well. On top of that the city has to deal with new development coming on stream mid year - basically staff have to make a guesstimate of how many new buildings will be built and start paying taxes over the course of the year. Of course they look at lots of factors to come up with numbers that are very close but ultimately that's got to be kind of a crap shoot. (Over the past few years we could count on lots of growth so previous councils had increased the amount they incorporated into the budget off the top - there was a change at the last budget session with this council but that's another discussion)
Staff also manage the city's finances pretty closely and that saves money too. For example part, of this surplus is due to "cash management" on our capital projects like the library and service centre renovation. The budget included paying the "mortgages" on these projects, in the case of the library staff didn't borrow the money until payments on the construction were due (that saves a bit in interest) and the service centre renovation didn't start as early as planned, staff won't "borrow the money" for it until needed so we've delayed a few payments.
Working the opposite direction was the fact that the development department saw reduced revenue this year. It's well known that construction has slowed down, that means that the city has seen less revenue from the permits that are taken out before construction starts. (I think that department showed a short fall of something like $600,000.)
So there's some of the reasons we ended up with a budget surplus - check my next post to see a discussion on what we (should) do with it.