© Times-Herald photo by Lisa Goudy
City administration and members of the gallery listen to Brian Acker, director of financial services, and his presentation of the city's equipment reserve budget at the March 10, 2014 council meeting. (From left) Pictured are Acker, Matt Noble, city manager, Ty Stokes, director of engineering services and Jody Hauta, director of parks and recreation.
There is $70,424 in increased costs to the equipment reserve budget.
Those costs are spread over the operating, utility and capital budgets, reflective of increased operating costs and replacement costs. The 2014 equipment reserve budget request is $2.93 million in equipment.
Council received the preliminary equipment reserve budget at Monday’s council meeting. It was unanimously referred to budget committee.
"The purpose of the equipment reserve is to provide a vehicle to ensure that funding is in place to purchase new equipment as old equipment wears out,” said Brian Acker, director of financial services. “Funds within the equipment reserve generate interest.”
Funds in the equipment reserve budget generated $755,000 in interest earnings in 2013, which is equivalent to a 3.25 per cent return. Historically, the reserve has paid out interest on funding set aside for equipment replacement at a rate of six per cent.
The difference between those two figures is made up from an “interest stabilization reserve,” according to city manager Matt Noble’s background report to council. In 2013, the amount of interest paid out of the reserve was reduced to five per cent to “reflect the lower interest rate expectations of the reserve over the next several years.”
Acker said in addition to interest, the budget receives contributions from the city’s various operating, capital and utility budget. In 2013, there was $1.94 million in contributions.
“The contributions are made by an annual flat charge to the respective budget or through rental charges for equipment usage,” said Acker. “The interest earnings combined with annual contributions of depreciation provide for the funding for the future equipment.”
Related to new subdivision growth, one piece of equipment is a $60,000-mower for the parks and recreation department that was requested in 2013. In 2014, the engineering department has requested another asphalt patching truck at a cost of $270,000.
“What this will do is provide us with two asphalt patching trucks. It’s something we’re looking forward to having this spring so that we’re able to focus on our pothole repair program,” said Acker.
Other equipment needs include new trucks, mowers and computer equipment. It said most of the 2014 equipment requests are for replacing current equipment. Those include a $550,000-fire truck, $300,000-taxation software to replace the current one that is 17 years old and a $100,000-para-transit van.
This year is the first time the Moose Jaw Cultural Centre is requesting major equipment, totaling $134,344 in 2014. After 10 years of contributions to the reserve, the report said there are “now sufficient funds in place” to replace the necessary equipment for the centre.
“If they hadn’t been making those contributions, that funding wouldn’t be available for the cultural centre. They would then be competing with the capital budget to try to find funding to replace their necessary equipment to continue to provide their programs and services,” said Acker.
When council approves the budget, city administration will tender and acquire the year’s requests. The tendering will be done as per the city’s purchasing policy that states the lowest bidder meeting the required specifications will be awarded the tender.
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