Budget Surplus 2008 - What Should We Do With The Green?

In my last post I discussed how the city ended up with a surplus of approximately $1.4 million dollars at the end of 2008. Tonight council will decide what to do with that surplus - there are least a couple of options, and one that I think is particularly important.

Generally when a year ends of with a surplus it goes in to a "Financial Stabilization Reserve". Sorry, sorry ... let me correct that; any surplus money that council doesn't choose to direct to an emergent project or priority goes in to the Financial Stabilization Reserve... but before I go on to that let's finish looking at the reserve first.

Currently the reserve sits at $4,718,845 and although that's a decent amount it's only equal to 3.2% of 2009's operating budget of $146,276,063. That's a pretty small reserve for example; if we divided that total operating budget by twelve you could say that it takes roughly $12.2 million dollars per month to keep the city running. Looking at it that way, the reserve covers about two weeks of operating the city. Of course that's a pretty simple way to look at it but you get the idea, it's not much of a reserve really.

So, yes I believe it's prudent to put surplus money into the Financial Stabilization Reserve. (there is a limit of course but at the current 3.2% of operating we're no where near it yet)

I also believe that it's reasonable to utilize surplus funds to address emergent issues and this is where the "green" my title comes in. (did you think "green" meant cash? )

Following hot on the heels of the motion to move the surplus into the reserve will be a motion to provide a grant to Aquatera for the support of waste diversion programs at the landfill. This grant would be funded by using a portion of the surplus.

I don't think its any secret that Aquatera has been in the news lately there are some concerns with it's financial outlook - revenue has dropped in many places and it's obliged to pay it's shareholders (the City, County and Sexsmith) certain amounts each year. This obligation is a problem and we've been trying to correct it.

In the interim though, the loss of revenue means that Aquatera has had to make tough decisions about what services it continues to offer. Until I was removed in February when I was on vacation, I was on the board Aquatera board for some of these discussions about what to cut.

The consensus was that we had to make sound business decisions based on financial information. For it's survival Aquatera has to keep doing the things that make money and stop doing the things that don't - that's pretty straight forward.

The difficult part is that Aquatera really is a company that takes environmental implications in to account when it does it's business. It supports reusing, recycling, cutting CO2 emissions, and diverting things from the landfill if there's another use for them. Unfortunately a lot of that stuff isn't a money maker, especially right now.

So the board decided to discontinue some of these "right-thing-to-do-but-no-money-in-it" kind of things unless there was some other funding to cover them. Since the landfill is actually the City of Grande Prairie's (the County and Sexsmith have their own that Aquatera is not involved in) I suggested that the board request the City help with funding them and a majority of the board supported that motion, which sent a request to the environment committee.

Here's the list (each program name is followed by it's yearly cost and the Tonnes of waste diverted form the landfill):

Concrete Diversion
$46,000
440 Tonnes

Drywall Diversion
$56,000
500 Tonnes

Cardboard Diversion
$53,000
124 Tonnes

Clean Wood Waste Diversion
$123,000
1000 Tonnes

Other Transfer Station Diversion
(Propane Tanks, E-Waste, Batteries)
$26,000
106 Tonnes

Building Material Recycling Centre Operation
$191,000
100 Tonnes

Landfill Gas & Bioreactor Operation
$110,000
5,500* (*that's Tones of CO2 equivalent reduction)

So, tonight there's a motion on the agenda for the city to make a one time grant to Aquatera of $605,000 to support these programs. I think that number is a little high; firstly I believe the Building Material Recycling centre can be run at less of a subsidy, and secondly those numbers reflected a full year's operation... and it's the end of April now.

Those two points aside, I'll be supporting the grant because I believe we have a responsibility to minimize what goes into our landfill. I think that in the long run it makes financial sense (the less that goes in to the landfill, the longer it lasts and the longer we can put off buying land for a new one). And finally I believe that it's how residents of the City expect their landfill to be managed.

There was once a politician that basically said it was less expensive to bury something and forget about it. I disagree.