SUNDRE – The Town of Sundre ended the last fiscal year in a surplus position with a little more than a quarter million dollars.
Administration recently presented coucnil with the municipality’s 2023 fourth-quarter, pre-audit financial reports and say that the excess funds came as the result of numerous variables, several of which can be challenging to forecast with a high degree of accuracy.
“2023 had some unpredictable situations in various areas that escalated our costs,” said Chris Albert, the town's director of corporate services.
Albert went on to add that last year also highlighted why the municipality embraced a four-year budget cycle, which he said helps to smooth out cost spikes that are unexpectedly incurred when unpredictable situations manifest.
Yet despite some sizeable budget overruns in certain areas, the municipality overall ended up comfortably in the black with a healthy cash reserve, he said.
“The surplus for the whole organization … it’s approximately $265,000,” he said, later adding there was also a net increase of more than $1 million in restricted surplus accounts.
As of the end of 2023, the municipality had among all of its restricted surplus accounts accumulated a combined total savings of nearly $6.8 million from a little more than $5.6 million. Those various reserves include several stabilization accounts that alone sit at approximately $2 million, he said.
“Those stabilization accounts are meant as emergency funds,” he said, adding those funds are specifically earmarked in event of unforeseen circumstances that cannot otherwise be absorbed in the existing operating budget.
However, what perhaps paved the way for the surplus were banking interests that Albert said worked out in the municipality’s favour last year.
“Banking interest in this particular case did actually benefit us quite a bit,” he said.
“If that banking interest had been the same kind of levels as it was in 2022, then 2023 would’ve actually been a break-even year. There would’ve been no surplus, or it would have been minimal.”
But there were also unpredictable situations in various other departments, he said.
“There’s a number of areas that will require monitoring in 2024 and beyond to ensure that all departments are meeting their requirements and staying within four-year forecasts,” he said.
Payroll is one item that can be difficult to forecast with the salary line for some departments coming in over budget while others come in under budget, although salaries organization-wide largely balanced out. Utilities are another variable that impacts every department and the municipality as a whole, he said.
“In this particular case, pretty much every single department is over budget in utilities,” he said.
“What I want to say about utilities is that projections right now, are that rates will stabilize,” he said, adding that municipality spent about $660,000 on utilities last year, or about $45,000 more than the budgeted $615,000.
“We are expecting utility rates to be a little bit more stable than they have been in the past year.”
Some unanticipated boons came in the form of provincial funding, with the government unexpectedly doubling to more than $60,000 from $30,000 the 2023 and 2024 Municipal Sustainability Initiative grant funding. However, that amount is anticipated to be reduced back to $30,000 in 2025 as the government replaces the MSI program with the Local Government Fiscal Framework.
Additionally, tax penalty revenues were higher than budgeted, he said, adding the municipality is experiencing is a slight increase in the number of property owners who are struggling to pay their taxes. The variance of more than $30,000 in that budget line item represented a little less than the total payments on one single property that is delinquent by a substantial amount, he said.
“If they weren’t there, we would actually be under budget,” he said.
As well, there were a number of emergent underground infrastructure-related issues including some substantial water main breaks and some surface work.
“There was some significant repair work that had to be done for sidewalks, for the line painting, things like this, just in various locations,” he said.
In the long-term, major capital projects that are on the docket including the overhaul of underground infrastructure along the Highway 27-Main Avenue corridor as well as Second Avenue NW will reduce the potential risk of such significant leaks catching the municipality by surprise, he said.
A few areas that fared well, he added, were the Sundre Community Centre, the Sundre Arena, as well as Greenwood Campground.
“Those community services departments are all actually in really good shape for 2023,” he said.
“They did manage to save some costs, or generate higher revenue. The campground did amazing in terms of revenue for 2023; it seems like we’re getting a lot more campers coming into the community over the summer.”
Among several questions raised by mayor Richard Warnock was a query about the materials and supplies expense line item for the gas department, which came in about $125,000 over budget.
Albert started by noting that expense includes the cost for the municipality to purchase the gas.
“Of course prices for natural gas fluctuate month to month,” he said.
“The way that we price the gas that we charge to the consumer, is we take the price that we have to purchase it at, and we add a markup,” he explained, going onto add, “It is not easy to project how much gas is going to cost for an upcoming year.”
But he added the amount paid by the municipality closely ties in with the additional revenue that is in turn received. However, while revenues were over budget by about $67,000, that still left a larger-than-anticipated variance, said Albert, adding that would be monitored closed going into 2024.
Coun. Chris Vardas requested additional insight in terms of how Albert arrived at the conclusion with regards to the expectation that utility rates will somewhat stabilize.
“It was a perfect storm of problems that really caused both electricity and natural gas costs to kind of spike,” said Albert about the past year.
In part, the director of corporate services said he looked at the projections of an energy consulting company and also mentioned upgraded power facilities that are anticipated to be back online by 2024-25. But there is also another tell-tale indication, he said.
“Energy companies have been approaching individuals with fixed-term contracts, and the pricing that they’re offering is significantly lower than current market rates,” he said.
“Typically, the only way that they can do that, is if market rates are going to come down.”
Council unanimously carried a motion approving the report for information.
