Town expenses down in 2020 but depleted reserves and operational deficits a concern

by Colin Smith

Morinville’s finances are in reasonably good shape, but low reserve levels and continuing deficits in tax-supported spending are a concern.

That’s the view of accountant Curtis Friesen of Metrix Group LLP who presented the Town of Morinville 2020 audited financial statements at the regular Council meeting Tuesday.

Metrix Group did preliminary work on the audit last December, coming back to complete it in February, and there were no issues, according to Friesen.

“The process went smoothly,” he said. “The books are in good shape.”

Looking at the statements, Friesen noted that the Town of Morinville’s income was $23,100,108, above the $22,628,008 budgeted for 2020.

That was due mainly to COVID-related grants of just under $1 million received by the Town, while revenue from taxes and utilities fees was generally lower than expected.

Income from penalties and fines, rentals, investments and development fees and permits was also down substantially.

Morinville’s expenses were also down in 2020, coming in at $27,694,460, compared to the budgeted $29,121,765.

General administration expenses were up by just under $500,000, which included $230,000 in expenses specifically related to COVID and more for salaries, IT work and consultants’ fees.

Expenditures for public works, parks and recreation, protective services and family and community support services were down.

The overall cost of salaries and pensions was just over $10 million, about the same as in 2019, and less than budgeted.

The annual operations deficit for 2020 was $4,494,352, short of the anticipated $6,493,757 and the 2019 deficit of $6,286,272.

Funding for the tax-supported deficit from restricted surplus totalled $1,954,605, while $2,338,964 was transferred to the restricted surplus from the utility-supported surplus.

The Town of Morinville has $6.2 million in reserves.

Net debt of the Town at year-end was $14,139,056, largely related to the cost of the Morinville Leisure Centre. The principal on the MLC debentures is being paid off at the rate of $1 million per year, while interest charges ring in at about $500,000 annually.

Morinville has an accumulated surplus of $134,565,752, which is the book value of all the Town’s assets, including buildings and other infrastructure, land and equipment.

Operational Deficit An Issue

In response to a question from Councillor Scott Richardson, Friesen pointed to the annual operating deficit as a financial area that Council needs to work on.

“That deficit of $4.5 million is the number you want to focus on,” he said. “You’re not raising enough revenue over time to replace your infrastructure. You want to turn that into a positive.”

Friesen added that while there is no rule, reserves of only $6 million are low for an operation the size of Morinville that has annual operating expenses of more than $20 million.

“You have some challenges,” he told Council. “Your reserves are tight and your cash flow will continue to be a little bit on the tight side.”

The audited statement also included the salaries and benefits disclosure for members of Council and the Chief Administrative Officer and designated Administration officers.

The disclosure showed that Mayor Barry Turner received $78,702 in salary and benefits in 2020, up from $64,020 the previous year. Councillors received in salary and benefits an average of $46,748, an increase from $38,609 in 2019.

In 2020 Chief Administrative Officer Stephane Labonne made $262,202, compared to $244,055 the year before. Overall pay for designated officers dropped to $450,410 from $732,510 in 2019.

Council voted to approve the audited financial statements.

1 Comment

  1. I wish some Rationale was given in the story for the increase in salaries of the mayor and cao. For the Mayor I hope the increase was to compensate for the loss of 1/3 tax free wage benefit. Otherwise I wonder what would justify such an increase? Oh did I mention deficits and pandemic?
    The CAO on the other hand probably had this increase in his contact so probably had no choice. UNLESS you go back to the relatively new contract the CAO signed and ask who ever had signing authority why they felt such large year over year increases were warranted. That same person/people also felt the next council should not
    Be able to negotiate their own contract with the CAO Tying the hands of councils for 6 yrs.

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