The stock market was favourable this year to Moose Jaw’s investment portfolios, which has allowed city hall to withdraw millions of dollars in earnings for projects in next year’s budget.
City administration plans to draw down $6,078,174 in earnings from the investment portfolios to fund 11 programs and services in 2021. City council agrees with the drawdown and voted unanimously during its recent budget deliberation meeting to approve the withdrawal of funds.
The municipality has about $100 million invested — $71.6 million in long-term funds and $28.1 million in medium-term funds — that professional portfolio managers look after. City administration expects the return on the long-term portfolio to be six per cent this year; year-to-date, it has been 8.59 per cent. Meanwhile, the expected return on the medium-term portfolio is 4.25 per cent; year-to-date, it has been 5.68 per cent.
“This was not a bad decision (to invest this money),” chuckled Coun. Dawn Luhning. “8.59 per cent is certainly not indicative of what we’ll get next year. But we can certainly say that that is good.
“The year has ended up very well in the markets — surprisingly,” she added. “We thought the bottom was falling out in March and April … (but) the markets have done well.”
Finance director Brian Acker listed some of the estimated drawdowns that city administration expects to make next year.
One drawdown includes taking $2.51 million in combined earnings from the capital expenditure fund equity and land development fund to support transportation and parks and recreation capital projects. Another includes using $2.7 million from the land development fund to upgrade the Moose Jaw Agri-Industrial Park to support the Great Plains Power Station. A third area includes using $122,052 from the perpetual care fund for cemetery maintenance.
The policies that city council uses to govern the use of reserve funding and the earnings received have not changed, Luhning said. But with increased returns during the past few years, she wondered if the money could be used for something else.
“This (was) a good year. We’ve done very well. Future years we’re not going to do as well,” said Acker. “If we want to maintain the amounts we draw down on a consistent basis and not be up-down, up-down (and) all over the place … this is the same methodology we used last year (and) would have used in years before.”
This report provides helpful information to residents since many people ask why city council doesn’t use its reserves more often, said Coun. Heather Eby. This report shows that council is using the reserves — it is taking more than $6 million in earnings and ensuring there isn’t a tax increase of 20 per cent.
“That $100 million is a workhorse for the citizens of Moose Jaw,” she added. “It’s working for us every day and every year. It worked hard for us in 2020 … . This is a very good horse in the barn for us. It’s a good news story.”
Mayor Fraser Tolmie pointed out that while returns of 8.59 per cent and 5.68 per cent are positive, council should be modest about the earnings and not be prideful about how much has been earned.
