Town of Morinville video of Council Committee of the Whole discussion and debate on the state of Town finances can be found here.
by Morinville Online Staff
“The Town of Morinville lacks the fiscal capacity to make necessary investments in municipal infrastructure to maintain that infrastructure at an acceptable level.”
That was the problem statement presented to Morinville Town Council on Tuesday night by Morinville Financial Services Manager Travis Nosko, ahead of Council breaking into Committee of the Whole to have a frank chat about the road forward.
Council was tasked with discussing a number of options: Accept the risks associated with declining infrastructure; Increase revenues through increases to taxes and service fees; Decrease expenses through a reduction in services or service levels; or a combination of those options.
The Issue At Hand
Morinville faces a financial predicament as revenues fail to meet budget expectations. The 2022 fiscal year overview revealed that while revenues exceeded the budget by approximately $80,000, total revenues underperformed by around $340,000, net of offsite levies.
Town Administration explained that overestimating water usage in the utility model led to lower-than-budgeted utility revenue. While changes have been made to the utility rate model for the 2023 budget, more is needed to address the financial gap.
Despite the shortfall, Morinville realized more than $1.5 million in savings in 2022 due to lower salaries, wages, benefits, unused contingencies, and the exclusion of amortization and library-related costs from the annual budget. Although savings are considered a one-time-only event, the town was still able to make reserve additions of just over $2 million in 2022.
The 2023 operating budget shows that all department budgets have favourable year-to-date variances, but it still remains to be seen whether revenues will match budget expectations. Investment income has already outpaced the year’s budgeted amounts, thanks to interest rates for deposits that are currently at a 20-year high.
To address the financial gap, Town administration says it s implementing improved forecasting procedures for 2023 to increase the accuracy of forecasts provided to Council during the 2024 Operating and Capital Budget.
But the town’s financial predicament will make it challenging to fund capital projects in the future. Budget commitments from remaining carry-over projects and the 2023 Capital Budget account for $2.1 million of the $7.5 million balance, leaving uncommitted funding for 2024 and beyond at just $5.4 million.
While Morinville realized some savings in 2022, the town still faces a financial predicament due to lower-than-expected revenues.
Implementing improved forecasting procedures and monitoring expenses closely will be crucial for the town to achieve financial stability; however, the town will need to explore ways to increase revenues or reduce costs to ensure it can fund capital projects in the future.
Council spent roughly an hour offering ideas on increasing revenue and saving dollars ahead of next year’s budget deliberations. The entire discussion can be seen in the town video of the meeting above.