While the City of Moose Jaw finished 2021 with an operating fund surplus of nearly $1 million, its accumulated surplus account was below targeted levels for a fifth-straight year.
The operating fund is part of the municipality’s general revenue fund and the source of program money used to pursue the city’s main services, such as public works, parks and recreation, general government and police and fire.
The operating fund finished 2021 with actual revenues of $54,177,589 and actual expenses of $53,248,176, leaving a surplus of $929,413. In comparison, city hall had budgeted operating revenues and expenses to be $52,468,632 and no deficit or suplus.
This excess will flow into the accumulated surplus and bring that account to $1,664,929 from $735,515, finance director Brian Acker explained while discussing the 2021 audited financial statements during city council’s Nov. 28 regular meeting.
The municipality’s past practice has been to maintain the overall accumulated surplus at roughly five per cent of the annual operating budget ($52,468,632) or $2,623,432, he continued. The account’s current balance leaves the city $958,504 short of the target, while the account was last at that five-per-cent goal in 2017.
The primary purpose of the accumulated surplus account is to fund years when a shortfall occurs in the operating budget, Acker continued. If the municipality does not have sufficient accumulated funds, it would have to make up the shortfall the next year by taxing residents more or using other reserve funds.
City administration would not recommend further use of the accumulated surplus account until it has been rebuilt to a more sustainable level, he added.
During a media scrum afterward, Mayor Clive Tolley said he wasn’t concerned that the accumulated surplus hadn’t reached its targeted goal since 2017.
“It’s been a tough financial situation for everybody since COVID started, and we did pretty good on our investments (last year),” he stated.
“Since 2019, council chose to have professional money managers (RBC Dominion Securities) invest the money. And we’ve had a pretty good return on investment, especially in 2021 (because) it was strong.”
While this year won’t be as strong for the investments because interest rates have increased, Tolley thought Acker gave a “very healthy report” about the City of Moose Jaw’s finances and how it compares to other communities. Those positives pleased the mayor.
Even though that account has not reached the targeted goal in five years, Moose Jaw is still in good financial shape and can overcome that hurdle, agreed city manager Jim Puffalt during the same scrum.
“As you know, from 2017 we’ve been using that, particularly during COVID and stuff,” he said. “So it’s good to see that we have a nice, healthy surplus to put back in there. So I’m feeling much more confident than before because we’ve been able to put a goodly amount of money back into the surplus account.”
When challenged about the account being healthy, considering it hadn’t reached its target in five years, Puffalt said comparing the account now to the last few years shows it is in good shape.
When asked if city administration would review that target, the city manager said it was important to see 2020 and 2021 as “one-off-type years” because the pandemic affected the municipality hard in 2020 and less so in 2021.
The third-quarter reports for 2022 show that more people are participating in recreation programs than before, indicating that things are returning to normal, Puffalt added. As long as another crisis stays away, the city should return to a more normal fiscal routine over the next few years.
The next regular council meeting is Monday, Dec. 12.
