Qualicum Beach residents may have noticed an improvement in the information provided in the August 31, 2020 monthly Financial Report submitted to Council at their regular October 7, 2020 meeting.
The column that listed the previous year’s budget numbers has been removed. No loss. It was, let’s say, of questionable value. In its place is a new column showing Projection to December 31, 2020, i.e. forecast of revenues and expenditures to year-end.
Kudos to Genelle Conn and the crew in the Finance department for finally giving the public at least a hint of how the year is going money-wise at Town Hall.
Reining in Town spending
In an article published Aug 8, 2020, we reviewed the Town’s apparent lack of reaction to the potential ballooning deficit.
Now, thanks to the inclusion of the year-end forecast of revenues and expenditures, it appears that Town managers have (although shrouded in secrecy, and with virtually no public consultation or communication) reduced the projected deficit from $5.3 million to $1.4 million — an almost four million dollar improvement to this year’s rather dismal bottom line!
The dramatically changed year-end financial forecast, was quickly received as information by Council — strangely with no comments, questions or discussion by any of the Councillors or Finance managers.
Another earlier article had shone a light on the cash crunch, worsened by the rejection of most of the Town’s applications for grants from senior levels of government. In that article we had also stated “What would certainly be more meaningful, and demonstrate an improved level of transparency and accountability, would be an additional column on the Town’s monthly financial reports showing Year-end (December 31) Forecast”. Now, two months later, this improvement is in place.
The Town’s August month-end financial statement shows — for the first time — the $1.7 million shortfall in “Other Government Grants”, i.e. grant revenues have fallen way short of the wishful budget. The expected deficit has shrunk because expenditures are now forecasted to drop by about $6 million compared to the original budget.
Yes folks, there has finally been a day of reckoning for the Town’s capital spending priorities. Budgeted capital expenditures for the year ($10,517,000) have been cut, almost in half, to a projected total of $5,462,800.
Good luck though trying to figure out, based on information provided to the public, which projects have been scaled back vs. deferred vs. cancelled, or whether new projects might have been substituted for existing projects. Or, which capital projects are coming in under-, over-, or on-budget.
Here are some major changes that can be gleaned from the latest report:
- “Memorial Improvements”, originally budgeted at $3.8 million for the year; now forecasted to come in at $2,000,000 – a reduction of $1.8 million.
- “Misc Airport Projects”, budgeted at $1.7 million; now forecasted at zero.
- “Water and Sewer Capital” projects, budgeted at $1.1 million; now reduced by a million to less than $100,000
- “Fire Department Equipment”, expected to cost $985,000 this year; reduced to a forecasted $110,000
Apart from the postponement of discretionary projects that were only going ahead if grants were received (e.g. Airport improvements), the explanation provided by Ms. Conn in her August report for the remaining $3.5 million reduction in expected 2020 capital expenditures is “the result of factors including the timing of permit approvals from the Province, availability of contractors, and restrictions from the Province regarding when we were able to perform work on the waterfront”. Sorry readers, that’s all she said in her report — leaving many questions unanswered.
A worrisome practice
At the October 7, 2020 Council meeting [at 33:45 on the video], the August 31, 2020 monthly Financial Report, with its new format, and the dramatically changed year-end financial forecast, was quickly received as information by Council — strangely with no comments, questions or discussion by any of the Councillors or Finance managers.
Perhaps all the sizable changes in revenue and expense projections had already been reviewed and discussed by staff and Council behind closed doors, and they required no further clarification.
But how is the public supposed to provide an appropriate and informed level of scrutiny of the handling of their tax dollars by the Town without at least some details about large variances between planned and actual revenues or expenditures?
Good luck though trying to figure out, based on information provided to the public, which projects have been scaled back vs. deferred vs. cancelled, or whether new projects might have been substituted for existing projects.
Some unanswered questions
What were the reasons that funding agencies outright denied so many of the Town’s grant applications?
Which project(s) were hindered by “the timing of permit approvals from the Province” and “restrictions from the Province regarding when we were able to perform work on the waterfront”? Was this bad timeline management by the Town? Might the permit applications be refused?
There has recently been extensive excavation work on the Beach Creek estuary at the QB Waterfront. What other specific planned “waterfront” work is affected by provincial timing “restrictions”?
Council members, particularly Councillor Harrison and Mayor Wiese, had been pushing to accelerate construction projects to help the apparently struggling engineering and construction sectors [a myth that Second Opinion QB debunked in a previous article.] Now, according to Ms. Conn, projects have actually been delayed because of a problem with “availability of contractors.” Or, was our problem just poor project management — not getting the hired help lined up and scheduled far enough in advance?
The bottom-line
To cover its original 2020 budgeted shortfall (expenditures exceeding revenues by $5,314,000), the Town had planned to borrow $875,000, sell $3,517,000 worth of Town assets, and draw (net) $922,000 from Reserves.
The revised plan is now to not borrow any money, sell only $1.2 million of Town assets, and draw only $186,291 from Reserves, all to cover the reduced projected deficit that is still $1,386,291.
It is not very comforting to be running a deficit, but this is a much better picture than the Town had provided previously. Taxpayers can thank QB citizens, such as Pat Jacobson and Bob Greig [representing the Qualicum Woods Residents Association as a Delegation to Council back on July 15, 2020], who have advocated for a more reasonable capital spending plan rather than selling off strategically important Town assets. Their persuasive suggestions have obviously made a difference.
Readers who wish to understand the gaps between the approved budget and the current year-end projections are encouraged to review the August 31, 2020 Monthly Finance report, which is included with the October 7, 2020 Council meeting agenda on pages 27 to 33.