Meaford council received some good news from independent financial auditors from BDO Dunwoody at the Monday June 11 council meeting.
Al White of BDO Dunwoody told council that the financial position of the municipality has improved over the last few years, and as a result the municipality is in a positive cash flow situation.
“We're happy to report again this year that this is a clean audit opinion,” White told council, “You're showing some very positive trends over the last four years. For the first year in four years you're in a positive cash position. On December 31st you had about $567,000 cash in the bank, whereas last year you had a bank overdraft of $1.6 million.”
That improvement in the financial position of the municipality came in part says White by a drastic reduction in capital expenditures, a strategy that White says will work in the short term, but is not sustainable over the long term.
“In 2011 you only spent about $750,000 on new capital assets. Not a long term strategy or else your infrastructure will deteriorate, but in the short term, it helps you get back into position,” offered White.
White also told council that long-term debt continues to be reduced each year. Currently the municipality is carrying long-term debt of slightly more than $9 million, however that is down from nearly $10.5 million in 2008.
Council was reminded that because there is a limited industrial and commercial tax base in Meaford, the majority of the cost for running the municipality falls upon residential ratepayers.
“The bulk of your property assessment is residential, and unfortunately that's where you have to raise your tax levy because you just have a very small tax base in commercial, and practically none in industrial,” White told council.
As for the 2011 year when compared to what was budgeted, White says that the municipality performed very well. Overall revenues were just $27,000 less than budgeted, and expenditures were some $737,000 less than had been forecast in the 2011 operating budget.
“So overall between revenues and expenses you were $710,000 better off than budgeted,” said White.
One area that the municipality has seen a significant loss in recent years is in the procurement of outside grant funding. To demonstrate his point, White used two pie charts to illustrate the source of municipal revenues, and while in 2007 28 percent of municipal revenue came from grant funding, in 2011 just nine percent came from grants.
“I thought this next slide was quite telling,” said White, “Back in 2007, 28 percent of the revenue of the municipality came from provincial and federal grants. This past year that number has gone down to nine percent, and that's mostly been made up by taxation which has increased from 43 percent of your total revenue to 60 percent,” explained White.
White says that council should be encouraged by the direction of the financial status of the municipality.
“Overall there are some positive trends happening in the municipality because your cash-flow has improved, your debt is being paid down, and you're starting to build up the reserves again,” offered White.
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