First let me send a big hello to Tom Findlay, who wrote in your July 17th edition concerning the above funds.
I think you have been touch with a council member who has given you the prepared line that you passed on in your letter. I would yield to your thoughts that the funds we have in surplus generate interest or earnings; not 4 million as you state but earnings never the less, I guess these earnings go to support our tax position in that year but I don’t know for sure. The point that I and others are trying to make is that a portion of these funds should be used to support programs such as our current upgrades to sewer and water. The reason I would give you is that INFLATION is eating up the BUYING POWER of these funds at rate equal to inflation.
For example, the $100 million we had in the year 2000 only has the buying power of about $54 million today. Inflation between 2000 and 2019 is reported as 46 per cent (accumulative).
Now I know what we have been told about letting the interest the money generates help us keep our taxes from increasing (what happened %%). The part they don’t tell you is how the $100 million buying power is being eaten up by inflation or just how much the goods and services we will be buying are going up (a rate two or three times that of inflation). What we could have purchased in the year 2000 for $50 million will now cost us $73 million or perhaps a good deal more.
Now doesn’t it make sense that we should target our use of this money to get the best bang for the buck we can. I think we can do both; we can spend and save if we plan our purchasing and employ the best investment strategies we can find. (Cash investments, GIC’s and the like, are the poorest investments usually generating rates less than inflation a losing strategy). Think Tom, how much has your car gone up over the last 20 years?
How about groceries, what about your house? Well the same principals apply to these funds ...
Keep asking questions ...
- Ken Wright
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.