A curve ball was thrown into the 2010 budget process when it was announced at the first of two public input sessions that the accumulated deficits from previous years amounting to nearly $3 million would be paid off in full this year.
The announcement was made by Meaford Mayor Francis Richardson at the conclusion of the budget presentation offered by Treasurer David Kennedy.
“We are going to pay off Meaford's deficit in one year,” Richardson told the sparse crowd who had gathered in the North Gallery at Meaford Hall for the meeting, “Previously we had planned to pay it over five years.”
Richardson said that a combination of ratepayer concern, and pressure from the Ministry of Municipal Affairs forced the municipality to change course from the five year plan established during the 2009 budget process that would have seen the deficits paid down over a five year period with the support of a five percent blended tax increase in each of those five years.
Kennedy told The Independent that the ministry has been in regular discussions with Meaford over the last year as the municipality has attempted to get their financial house in order, and though the five year plan established last year was accepted in principle by the ministry, they have applied pressure for the accumulated deficits to be addressed swiftly.
Ontario legislation does not allow for a municipality to carry a deficit.
To accomplish the deficit elimination, Kennedy said that the municipality will pull $1 million from working capital funds, and will borrow more than $1 million against capital reserves. These moves could put the municipality in a precarious position from a cash flow perspective as there will be just $200,000 remaining in working capital funds.
Councillor Jim McPherson was less than pleased with the plan.
“I obviously disagree with the rest of council with regard to how this budget was handled,” said McPherson who then questioned the wisdom of pulling so much money from reserves.
Kennedy explained that the municipality will borrow against the reserves so that the capital program is not “Brought to a crashing halt.”
McPherson then characterized then proposed 2010 budget as being “Increased taxation, increased staffing, and increased debt.”
The Municipality of Meaford began the 2010 year with a debt load of $9,946,170 according to numbers provided by Treasurer Kennedy in his presentation.
When asked about how the much touted five year plan will be affected by these moves, Kennedy said that the plan remains the same, but rather than paying down the deficit over five years, the funds generated from yearly increases in taxation will be used to replenish reserve accounts, and pay back money borrowed for deficit reduction.
A second public input meeting for the 2010 budget will be held Tuesday night at the Woodford Community Centre.
