INNISFAIL – While the federal and provincial governments trudge forward during the COVID-19 pandemic crisis rolling up billions of dollars in spending, the Town of Innisfail can boast it’s debt free.
Heather Whymark, the town’s director of corporate services, presented council the town’s 2019 Audited Financial Statements, prepared by Mitchell Kennedy and Alan Litster from BDO Canada, at its May 11 regular meeting.
While financial gloom is encroaching on future prospects for most other municipalities across the province, the picture today for Innisfail is nothing short of enviable.
“We are probably envied by other communities. Not very many communities get to this situation anymore,” said Mayor Jim Romane. “Innisfail has always been very frugal with their finances since I have been around.
“Our financial system that is in place works superbly in reporting, especially for the end results for the end of the year for the auditors,” he added. “Auditors love our system. It is encouraging to see the end results.”
The auditor’s report, for the year ending Dec. 31, 2019, noted the town had a total debt of $100,900. That debt, for a private land deal near the Innisfail Golf Club, was cleared last January.
“We have no debt right here, right now as we speak,” said Whymark, agreeing with the mayor on the town’s envious financial position.
“It is very uncommon to not be in debt in any way, shape or form, whether it is a private loan which we just paid off, or a government loan,” she said, adding it has been at least 10 years since Innisfail has been debt free. “It’s very unusual to be a town of this size and not to have debt.”
The report also noted the town had a total debt limit of $36,944,275, and a debt servicing limit of $6,157,379. The report stated the thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities that could be at financial risk if further debt is acquired.
As well, the town has saved about $13 million in reserve monies.
Whymark said the town has always been in a good position to borrow and now that it is walking into the unknown over the next 18 months or so with the COVID-19 pandemic, the untouched borrowing limits does give them enviable options many other communities do not have.
“We could get that tomorrow if we chose to act upon it,” said Whymark about the total debt limit of $36,944,275. “Because we are so strong financially that helps that, with no other debt and our collectables are kept to a minimum.”
However, she added it might not be council’s preference to get into a borrowing frame of mind down the road, as there are specific reasons and conditions when it’s beneficial.
“My philosophy usually is that you can look at borrowing as long as you are able to recoup and that is like for lift stations, subdivisions, and works of infrastructure,” she noted. “And then you can get it back. The contractor, when they take it on, pays for that once they start developing. You get a payback in the end for borrowing.”
Whymark added, however, that in the next two years it might happen the town may opt to borrow. She noted the potential multi-million dollar cost to modernize the Innisfail Aquatic Centre.
“Is that something we’d like to do now and perhaps borrow to do that and recoup through taxes and everything else later? That option is always available,” she said, agreeing borrowing for an even bigger project like a multiplex could be an option in a few years time as senior levels of government, broke from COVID aid, could be reluctant to hand out large scale grants for recreational or cultural facilities. “It’s great to have the financial component on the table because we can make better decisions that way, versus being backed into a corner.”
In the meantime, with the town focusing on fiscal impacts of the pandemic, Whymark said the town has incurred about $150,000 in COVID-related expenses. She said it’s hoped the province will pick up that expense, but there are no guarantees at this point.
However, with the town’s fiscal position currently as healthy today as can possibly be, the $150,000 COVID expense can be handled without incurring debt, said Whymark.
“Should the government not comply with some form of coverage for that then we will be looking at it internally with our budget,” she said.
