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New Tecumseth Council receives year-end Budget Variance Report
December 7, 2023 · 0 Comments
By Brian Lockhart
New Tecumseth Town Council recently received its year-end Budget Variance Report as of Sept. 30, 2023.
The report provides information on operating and capital forecasts based on the Sept. 30 financial results.
As of Sept. 30, Town of New Tecumseth staff are forecasting a surplus of $1.2 million and a water and wastewater deficit of $377 thousand. Overall, capital projects are forecasting a favourable variance of $226 thousand at Project Completion.
On Feb. 27, Council approved the 2023 Town, Water and Wastewater Budgets. The reports provide status updates on budgeted capital projects throughout the year, including additional details for projects considered to be high profile as per the Town’s Capital Project Administration and Reporting policy.
The Operating Budget provides for expenses that cover day-to-day expenditures and activities, including utilities, insurance, staff wages and benefits, program supplies, and facility/equipment repairs and maintenance. It includes revenues expected to be received from fees and various other user-paid activities like program registrations and ice rentals that are applied to reduce the amount needed to be raised through property taxation.
Staff are forecasting a year-end surplus of $1.2 million.
Water and wastewater are forecasting a deficit of $277 thousand at year-end. As these services are self-funded by water and wastewater rates, the deficit will be funded by reducing the contribution of the Water and Wastewater Asset Replacement Reserves.
The Capital Budget addresses growth requirements and identifies the life-cycle repair, maintenance, and replacement of existing infrastructure, including community centres, fire stations, parks, arenas, roads, and sidewalks.
The Town’s 2023 Capital Plan includes a total of 147 capital projects valued at $93.6 million.
Overall, staff are forecasting a $226 thousand favourable variance at the end of project completion.
Significant projects include:
- Large fire apparatus replacement
- Two single-axle combination dump/plow trucks
- Drainage Master Plan
- Riverdale Lions Pavilion and Splash pad upgrades
- Boyne River environmental cleanup
- Sideroad 10 and 6th Line intersection and 2022 Rds Improvement design
- Fire master plan and risk assessment
- Beattie Bridge
- Beeton tennis courts resurfacing.
It is important to note that capital projects are funded from reserves and not directly from property taxes. Therefore an unfavourable variance does not impact taxes but adjusts the value of the Town’s reserves.
Reserves and reserve funds are essential for financial sustainability, and the Town has many reserves and reserve funds with specific purposes.
The categories of reserve and reserve fund balances are:
- Stabilization reserves are created to help the Town smooth expenses or mitigate future risks.
- Capital from Taxation Reserve is funded from an annual contribution and funds are used to fund new capital works projects unrelated to asset replacement. Due to some project delays, funds are, at times, carried forward into the next year.
- Legislative and growth: These reserve categories include the building Code Reserve, Development Charges, CIL Reserve and Parking Reserve. The use of these reserve funds is legislated, and any project funding must align with the legislated usage.
- Gas Tax: The Federal Gas Tax funds received by the Town are primarily used to fund the Annual Road Improvement Projects.
- Asset Renewal: These reserves are set aside for the future repair and replacement of existing assets.
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