Wednesday, August 13, 2008

Investing Your Surplus Now

As you may have read in the local papers, the Town ended 2007 with an accumulated operating surplus of $421,207.

Why do Towns accumulate surpluses, you ask? Put simply, it is a combination of more revenue than anticipated and less spent than anticipated.

As you know, many people continue to build new homes or renovating current homes in Pelham. All these improvements translate into increased assessment, which eventually means increased property tax revenues. Since these “in year” improvements are not known, they are not budgeted.

At the same time, some costs come in lower than anticipated either because of favourable tenders or because of improvements / efficiencies to the original work.

Under our former system of budgeting – for which 2007 was the last year – any such savings were lumped into a general surplus operating account. (Now, we keep them in their specific reserves. For example, if a road reconstruction tender comes in under budget, we keep those savings in the roads reserve to use of future roads projects.)

At our last Committee meeting, Councillors allotted your surplus funds for nine specific uses:

Transit: In May, Council agreed to enter into an agreement with Welland Transit to offer Pelham residents transit for one year starting on Tuesday, September 2, 2008. While the system will cost $91,000 total, we set aside up to $60,000 to cover any expenses above grant and fare revenues.

Physician Recruitment: The 2008 Operating Budget decreased the allocation for Physician Recruitment. Now, we are not only reinvesting $20,000, we are also establishing a specific reserve for this important program.

Welland Hospital Foundation: Following a formal presentation by the Welland Hospital Foundation, Councillors agreed to invest $20,000, but only into equipment for those programs that will remain at the Welland Hospital Site. (Since 1984, the Town has granted more than $450,000 to the Hospital.)

Winter Maintenance Reserve: A harsh winter can lead to a deficit, while a calm winter can lead to a surplus. Thus, Councillors agreed to initiate a $50,000 Winter Maintenance Reserve to reduce this risk to our operating budget.

Tree Maintenance Program: Council previously approved the tender of $83,000 to respond to an inspection of trees conducted last fall. This work, already being carried out by Shorthills Tree Service, includes 79 removals, 92 prunings, and 59 cablings.

Town Square Crossing: Following a formal request by Shirley Potts, 45 Pelham Town Square Tenants Association President, Council approved $52,000 for a signalized crosswalk between the Library and the Plaza.

Other: Councillors also agreed to allocate $70,000 to a Facilities Reserve; $50,000 to the Fire Equipment Capital purchase account; and $16,207 to a Tax Rate Stabilization Reserve.

These allocations are scheduled to be formally ratified by Council at our next meeting on Monday.