Another city budget in the books

Lisa Goudy
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Council gives final approval to equipment reserve budget

The equipment reserve budget was subject to much debate at council.

Following the 20-minute debate, the majority of council approved the equipment reserve budget with no changes.

The discussion centred around the interest stabilization reserve, which makes up the difference between interest on funding set aside for equipment replacement and interest earnings generated in the equipment reserve budget.

Coun. Brian Swanson made a motion to refer the budget back to city administration to prepare a report to budget committee with options for reducing the 2014 equipment reserve budget purchases by $400,000.

“We’re actually spending more than we have coming in and have been doing so for at least seven years,” said Swanson. “I’ve gone back on the reports and that is facilitated by what’s in your report called the interest stabilization reserve, which allows the city to assume, up until a year ago, six per cent return on its investments in the equipment reserve, which as you know is not the rate of return that people have been enjoying the last several years.”

Equipment, he said, is an asset of the city and some other assets are being ignored such as infrastructure.

The equipment in the 2014-2018 equipment reserve budget has a value of $37.47 million with depreciation over 12.5 years. Swanson said in the 2009-2013 equipment reserve budget, city equipment was valued at $29.1 million with depreciation over 15 years.

Brian Acker, director of financial services, clarified that the difference between the 2009 and 2014 budgets is Mosaic Place and YaraCentre that didn’t exist in 2009. Now there is $2.7 million in equipment related to the facilities. The 2009 report also excludes the Moose Jaw Police Service that has a 2014 equipment request of $3.6 million.

Swanson said in the 2007-2011 budget, the interest stabilization reserve had a balance of $1 million. Since then, the balance has generally decreased and is now at an $897,000-deficit in the current five-year budget.

On average, he said the city is spending $325,000 per year more on equipment than the money coming into the reserve.

“Rather than just assume hat interest rates are going to start climbing, I think we should adjust our spending to reflect what the long-term trend is and that’s low interest rates,” said Swanson. “We should reduce the amount of spending we have to sustainable levels.”

But Mayor Deb Higgins said the equipment reserve budget and the interest stabilization reserve is similar to a chequing account to “offset overuse and shortages within the account.”

“Equipment is the category that impacts every other category of business that the City of Moose Jaw does. Because we don’t have enough operators, should we sell a grader or not replace a grader? I mean, it absolutely doesn’t make sense when we look at depreciation and the way the equipment reserve is established,” said Higgins.

“To replace equipment in a timely fashion, we need to have the operators to be able to operate the equipment but we also as a city need to maintain the capacity and the ability to repair roads, repair water mains and remove snow when it’s needed.”

Coun. Heather Eby added equipment like a sanding truck, garbage truck and a line painting machine are among those being replaced.

“We’re not replacing things that aren’t being used or aren’t necessary. We’re replacing things that make a difference in the City of Moose Jaw,” said Eby. “(People) expect those pieces of equipment to be there.”

Acker said the interest stabilization reserve, established in 1997, is meant to stabilize those interest rates as interest rates increase and decrease.

“We don’t want to be adjusting the interest rates every year up or down depending on how we’re doing in terms of our investment,” he said. “We’re now in a period where interest rates do appear that they are starting to rise.”

The referral motion was defeated in a vote of 4-3. Instead, council approved the budget as presented.

Organizations: Moose Jaw Police Service

Geographic location: Moose Jaw

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