By Kristi Patton - Penticton Western News Published: January 08, 2009
Penticton council is painting a far different financial picture than the rosy outlook left by the city’s former mayor. In response to a letter written by former Mayor Jake Kimberley published in the Western News on Nov. 22, city councillors requested that the status of the reserve funds be updated and released to the public by the director of corporate services.Kimberley had stated that the city’s financial position was looking strong for 2009.“I will reinforce that statement — the city’s total reserves are the highest they have ever been at $39.1 million, up from $6 million in 2005,” said the letter he penned after losing his seat in the municipal elections in November.
Jack Kler, director of corporate services for the city, said at the committee of the whole meeting on Monday morning, that as of Dec. 1, 2008 there is an estimated $29 million in reserve balances. He noted that the best indicator of the reserve position will be as of Dec. 31, after the annual financial statements have been prepared. “We now got it out right, that he (Kimberley) was going on a prior balance sheet ... so that makes a significant difference in the amount of that reserve category and our prospects for 2009 as it relates to what this council will be able to do in the upcoming budget process,” said Coun. Mike Pearce. According to Kler, reserves are based upon revenues received, appropriation for approved budget expenses and transfers and interest income. He said that it is anticipated that another $6-$7 million in reserve appropriations will take place by year-end. “In reality, for this particular administration, the reserve balance as of Dec. 31 is really your starting point and I would guesstimate that it is going to be around $21-$22 million,” said Kler. “That is where you are really starting from and that contrasts to the approximately $39 million that we had at the end of 2007.”
The South Okanagan Events Centre was the example he gave as the most obvious for the dramatic change because it has taken a majority of the reserve fund that was accumulated in the casino funds. The notes Kler provided council with stated that in 2008 budget the city used approximately $10 million more of the casino reserve (SOEC project) than the prior year. The city also has budgeted expenditures of $1.8 million from the water capital reserve (treatment plant upgrade) and $800,000 from the local improvement reserve (Penticton Industrial Development Association improvements). As well, some of the 2008 target revenues are expected to not be met which will also contribute to a lower reserve balance as at Dec. 31, 2008, including development cost charges.
Council heard during that same meeting that several business, who have decided to not go ahead with projects at this time, have requested to have their development cost charges returned less the costs for the work done by the city staff. Mitch Moroziuk, director of development services, said that at least one of those requests was close to $1 million.
The reserve funds were at their highest in 2006 ($39,864,325) and appropriations were at their lowest ($5,859,623). The following year, the appropriations drastically changed to $19,829,666 and to $20,549,392 in 2008. “We all know there have been lots of figures flying around during the election process and I personally wanted the benchmark to say here, Dec. 1, here is what we are looking at,“ said Mayor Dan Ashton who noted that the numbers heard at the council meeting were substantially different than what was printed in the letter to the Western News.
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