Council approved during the March 12 meeting the transfer of reserve funds as well as the allocation of 2017’s projected surplus.
Vic Pirie, director of finance and administration, informed elected officials that a council motion was required to transfer reserves that had not been done in 2017.
“Council is the only one that has the authority to be able to move funds into and out of reserves,” said Pirie, adding that at the end of every year, administration requires approval for transfers that had not occurred.
“A lot of it is actually taken care of when you approve the operating budget or when you approve the capital budget, you’ve approved those transfers because they’re identified in the budget. Often you will have a project come forward during the year that was not included in the budget, and so we ask authority to proceed with it if it’s coming out of reserves.”
Providing a recap, the director of finance said administration had identified by department where reserves were destined to go, and pointed out highlights such as higher-than-expected surpluses in the water and wastewater departments.
In 2017, the water department's actual operating surplus was about $142,000, but only a little more than a projected $8,200 had actually been budgeted, representing a total net surplus closer to about $150,000. Similarly, the wastewater department surplus had in 2017 been budgeted at an estimated $16,000, he said.
“There’s $91,000 that was generated. So there’s a $75,000 request to transfer into reserves, because we already have the approval for the $16,000.”
Additionally, unspent budget line items such as $120,000 originally earmarked for the East Side Area Structure Plan needed to be transferred into reserves to be brought forward to 2018, he said. That particular reserve fund will help the planning department to create a critical Master Infrastructure Plan for the whole municipality, he added.
“There is no specific project tied to these reserves (water, wastewater and gas) at this point in time, but they will be used in the future for specific projects in those areas.”
The 2017 budget had forecast approved transfer allocations into reserves amounting to about $955,000 in respective departments, but the third quarter financial report revealed an additional roughly $630,000 that needed council’s approval for transferring forward into the 2018 budget.
Council subsequently approved the transfer of the reserve funds, which led to a discussion on how to allocate the projected surplus of approximately $212,000.
“We are suggesting in the RFD (request for decision) that out of the $212,000 that you allocate $195,000 of that surplus, which is your net operating surplus, to the Budget Stabilization Fund,” said Pirie, adding that moving forward that reserve will likely be renamed the Financial Stabilization Fund.
This reserve was established in 2016 to cover unexpected or unintended one-time costs, he said.
“If the Town of Sundre was to experience a major flood incident, for example, and we incurred costs that were not recoverable from the province, you could pull these monies from the Financial Stabilization Fund.”
The reserve is not intended to fund ongoing expenses, but rather items that were not anticipated when the budget was approved, he said.
Seeking clarification, Coun. Rob Wolfe — who was speaking in favour of the motion — asked whether that fund could be used to cover budget shortfalls in the future.
“Absolutely, and that’s exactly what it’s set up for,” said administrator Linda Nelson.
Council proceeded to approve the allocation of the surplus into the budget stabilization reserve, bringing the fund’s total amount to $305,000.
