Rant on Planned Reserve Report at Tuesday's COW Meeting.

Agenda Package - 500Kb P.9-15 RESERVE FUND BALANCES AND CONSOLIDATION RECOMMENDATIONS

On Tuesday at the Cow Meeting the Finance Manager's report that was presented and adopted at the Finance Meeting on Sept. 27 will be debated by the 6 man Council. (Coun Beardsell will be absent.) Some of the comments about the history of the reserves and their purpose seem to be at odds with my memory and some of the balances in these reserves as projected in this report are suspect!

• Casino Grant Reserve: 'These funds could be used to fund 2008 capital projects or could be utilized for the prospective new Library structure.' In view of the fact that the Casino expansion is on the afternoon Council meeting and the resultant increase of Gaming Revenue to the City in 2008 could more than double if this expansion is allowed then the implications of the use of these funds to back door the Library without a referendum rears its ominous head? Hopefully discussion of this will also be part of the Special Library Meeting of Oct.11 ?
• Development Excess Reserve: 'This reserve was created to accrue the excess of development revenues over the cost of providing the service.' My recall is that this reserve was set up to measure the difference between the budgeted amount and the actual amount of revenue received so that the constant underestimation of revenue could be measured. Furthermore it was to be used in subsequent years so that a more optimistic estimation could be used knowing full well that there was money in reserve that would be moved over to cover any miscalculation. Overestimation of expenses and underestimation of revenues is the traditional way of building up reserves by stealth rather than  in an open and transparent vote of council.
  
• RCMP Contingency Reserve: 'This reserve served to offset the costs of moving to full compliment levels withing the current budget cycle.' This reserve was finally set up a couple of years ago and the council agreed by resolution that the difference between the estimated Policing costs and the actual Policing costs would be transferred into this reserve and only transferred out by a specific resolution of open council. In 2007 $843,000 was indeed taken out for the budget of this year and was passed by council in an open budget meeting. However the 2006 surplus of $385,367 for overall Policing costs as reported in the annual report does not appear to have been transferred into this reserve in 2007. The transferred in amount appears to be only $17,550. Now I do remember $241,000 being allocated by council resolution for the 2007 costs of the new bylaw officers but this is not reflected in a deduction to the Police Reserve. Perhaps it was netted against the original surplus of $385,367 leaving us with a transfer of $144,367 to be made. BUT only $17,550 was transferred. ???? This overestimation of expenditures in policing was used in the past to create slush funds but the creation of a dedicated reserve with a legislated formula for moving money in and out was created to ensure that this would not continue.
  
• Fringe Load Variance Reserve: 'This reserve was created at the end of 2006 to increase the funding sources for future wage and benefit costs.' This reserve was caused in 2006 by the fortuitous situation in which the standard overhead charge that the City is using of 22%(?) was higher than necessary because of changes in the employee service demographics. This one time bonanza caused solely in the 2006 year would be cause to reexamine the overcharge standard charge rate. (A quick look at the 2007 accounts will ascertain if this is a one time occurrence or a need to adjust the standard rate for future budget cycles. ) In any case, if it is to be left in this 'dubious' reserve it should be earmarked for a tax equalization reserve to be used to offset residential taxes when future businesses tax ratio downward adjustments are proposed.
• Affordable Housing Reserve - 'Ultimate use of these funds may depend on recommendations flowing from the Affordable Housing Committee.' There is a decision upcoming to take $60,000 from this $550,000 reserve for Hospice house. (For the record $330,000 was transferred into this reserve as start up money from the newly set up Police Reserve as the first specific open vote by Council to authorize such a transfer from this Reserve.) The $60,000 in Grants covers $18,552 for Vernon DCC's and $15,160 for GVSC DCC's and these DCC's could be waived under the LGA. (Whether it is necessary to put a specific clause in our DCC bylaw is still under review but I have been asking for this for at least 3 years as it would allow these projects to get the benifit they seek at no direct cost to the taxpayer. Because of the upcoming request for DCC relief for the 40 units along the Reclamation Plant that may cost the City Taxpayer $400,000 it is imperative that the DCC bylaw change ASAP. This would preserve the money in this reserve to be used in a more appropriate manner.
  
• Airport Capital Reserve: There was roughly $113,333 in this account when the Airport Commission was disbanded at 2006 year end. In these Reserve reports this money seems to have disappeared ??

If this is the start of a planned thorough study of reserves then it is a good starting point. I hope this is the starting point and not the finish line.