Low city surplus spawns budget warning

By JOHN MOORHOUSE Pentiction Herald Sept 16

Penticton council has been warned of a tight budget in 2009, as the city‘s general revenue surplus remains below its recommended minimum. City treasurer Doug Leahy told council Monday the surplus has dropped to $2,025,000 despite a less-than-expected appropriation from the fund in this year‘s budget. The city withdrew almost $310,000 in surplus revenue from the account, instead of the budgeted $523,000. However, Leahy said unless the surplus rebounds to the recommended $2.2 million minimum by the end of December, council will have to amend the city‘s fiscal policy and faces a tight budget next year. “If we are below or right at minimum surplus levels, we will not be able to access surplus monies in the 2009 budget,” Leahy said. “So the 2009 budget could be very difficult.” Council voted unanimously to the budget amendment. However, Coun. Dan Ashton noted the surplus spending for this year has already occurred so it will be very difficult to increase the surplus figures by fiscal yearend. “The horse is already out of the barn with these expenditures for this year,” Ashton said. “That‘s what a new council would have to look at for ’09 - to bring those (surplus) levels up.” Jack Kler, the city‘s director of corporate services, said the general revenue surplus is one of several city accounts used in balancing the budget. The city‘s total reserves and surpluses amounted to $39 million as of Dec 31., 2007. Kler emphasized the general revenue surplus balance is used for the day-to-day operations of the city – and has nothing to do with funding for the South Okanagan Events Centre.

“What it means is that council, in their next budget cycle, needs to spend less than what it might want to,” he said. “Traditionally, we appropriate about $300,000 every year.” “We have lots of money in other reserves,” he added. “Our liquidity is always there, but from an accountant‘s point of view, we like to make sure that each fund can stand on its own.” The amended 2008 budget also sees the city spending $592,000 for energy-efficiency upgrades to the Penticton community centre, to be funded entirely from federal gas tax revenues. The retrofit will involve such items as more efficient light fixtures in the pool and gymnasium, possibly including solar energy panels.

Meanwhile, the city has finalized its casino funding agreement with the parent company of Lake City Casinos for $30 million in Development Assistance Compensation (DAC) revenues for the South Okanagan Events Centre. Kler said the agreement, finalized late last week, guarantees $30 million in casino revenue which the company has agreed to pass along to the city to fund annual debt payments on the Events Centre. The city is also utilizing $10 million of its own anticipated casino revenues to the project. Mayor Jake Kimberley noted without the casino money, the events centre would never have been built - or would have required at least a 15 per cent tax increase. Under the approved funding formula for the facility, city taxes will rise by two per cent - phased in over three years ending in 2009. The agreement with Lake City Casinos also includes a clause on commercial naming rights. The contract retains the name “South Okanagan Events Centre” for at least the next 20 years. No commercial naming rights for the complex can be awarded during that time. However, the galleria, linking the events centre with the nearby Penticton Trade and Convention Centre, will be named the Lake City Casinos Galleria.
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Don Quixote Note: The original outline of an agreement between Penticton and Gateway Casinos back in August 10/06 contained the following types of recognition:

1. Naming the Hospitality Suites as Lake City Casino's Hospitality Suites;
2. Naming Rights to the Galleria
3. Naming rights to the indoor track;
4. Allowing the placement of signage within the South Okanagan Events Centre that is consistent with the form and character of any other signage and such space to be made available at no cost to Lake City Casino.
5. Use of a Hospitality Suite at no cost.
6. The City will not be seeking any commercial naming rights to the South Okanagan Events Centre until the end of 2026.

It looks like the City (if the only things Lake City got was those 2 items in news report), once again has negotiated a better deal than that originally released in their FOI response to me. A great negotiation when you consider that the outlined agreement was originally copied to Gateway Casinos. I think I will wait for confirmation for the actual release of the finalized agreement.