Town records $1.1 million surplus

·5 min read

The Town of Hinton closed out the year of 2020 in a better financial position than was anticipated during the budget process, with a surplus of approximately $1.1 million.

Administration said this was the result of significant efforts by the Town to ensure that the impacts of the COVID-19 pandemic were offset via various strategies and then receiving funds through the Alberta’s Municipal Operating Support Transfer (MOST) Program.

Council will discuss what to do with the 2020 surplus at a standing committee meeting prior to the end of March 2021.

“Bringing in a surplus is a sensitive topic. Knowing that it was achieved by the hard work that the people did over the year, we wanted to really make sure we went through these numbers with a fine-toothed comb. The only thing I would say is that we still need to keep in mind that the auditors are still working on year-end,” said Carla Fox, Hinton’s director of corporate services, at the regular council meeting on Feb. 2.

She noted that the turnaround of these numbers was very quick and isn’t something they’ve been able to achieve in a long time.

While some changes may still come up, especially with large transfers of money this year such as the golf course asset, the number presented is close to the actual, she continued.

Coun. Ryan Maguhn stated that this surplus provides council with a very serious discussion that requires more time. He added that council and the public would need some time to wrap their heads around the fact that they have a surplus.

Coun. Dewly Nelson said that there are some really interesting things council can do with the surplus, but his first instinct after four days of thinking about it is to place the funds in some reserve.

“Our challenge in figuring out what to do with the surplus is quite unique and it’s a lot easier of a conversation to have than a lot of municipalities are having right now. Hats off to administration for making the decision but also for everyone within the Town that took temporary layoffs and did something that put our municipality in a position where we’re not in dire straits right now,” Nelson said.

The Town of Hinton learned that they would receive $1,005,641 through the MOST Program later in 2020, to help offset the COVID-19 related losses for 2020.

A Safe Restart Agreement was signed to secure the funds for the Town of Hinton and under the Terms and Conditions set forth by the provincial government.

Council approved to move approximately $700,000 of surplus anticipated due to the MOST Grant into the Emergency Response Reserve (Emerging Issues Reserve) during the budget deliberation process. Of that reserve, $500,000 was used to offset future year operational cost increases, of which $200,000 to be used in each 2021 and 2022, and $100,000 to be used in 2023.

Another $169,060 was included in Council and Public Relations Operating Project budget for 2021, and its use will be determined by Council at a future meeting.

The overall financial status currently reflects a remaining surplus of $1,128,269, after subtracting the $700,000 transfer to the Emerging Issues Reserve.

“A lot of these savings are the result of our management team, our leadership team, working hundreds of hours of unpaid overtime,” Fox said.

Back on April 7, 2020, Council directed administration to try to offset losses with cost mitigation strategies to ensure a minimal financial impact to taxpayers in the future. Funds from the 2020 contribution to the Recreation Center Expansion Reserve were moved into an Emergency Response Reserve in the amount of $240,000 to be accessed during the COVID-19 pandemic response time if required and approved by Council.

At the start of the pandemic, provincial financial support to municipalities was not expected, and Administration worked to offset the anticipated $1M in lost revenue and increased expenditures to the end of the year.

There were 59 temporary layoffs and one permanent layoff due to the unanticipated impacts. Cost for items like cleaning, cleaning supplies, barriers, masks, software and computer hardware to work remotely, as well as signage and additional supplies had large unplanned financial impacts that required reductions to ensure that the Town was not left in a loss at the end of the year that would impact taxpayers.

Many capital targets and strategic initiatives for 2020 were placed on hold to ensure appropriate cashflow was available to the Town and resources were available to address additional work loads.

Administration reported a successful cost reduction strategy on June 9, 2020, offsetting the losses anticipated to date due to COVID-19 impacts. This resulted in approximately $800,000 being reduced from anticipated operating expenditures to offset the anticipated losses.

At the regular council meeting on Feb. 2, Administration recommended allocating the surplus in Recreation, Parks and Trails into the Parks and Trails Reserve and use $594,923 of the total 2020 surplus to offset the unrestricted deficiency reserve. They also recommended any further surplus from 2020 be placed into a reserve of Council’s choosing.

This recommendation was based on the fact that cost saving measures achieved by the Parks, Recreation and Culture Department were a massive undertaking, involving large-scale temporary layoffs. Administration deemed it logical to apply this surplus to the Parks and Trails Reserve as this contribution will help in supporting the long outstanding capital projects in this area and be able to address any emergent issue.

The unrestricted deficiency reserve is sitting at a balance of -$594,923 stemming from previous years losses that could be paid off by the surplus.

Council will discuss further at a standing meeting prior to the end of March. The year-to-date financial statements will come back to a standing committee meeting by the end of February 2021.

Masha Scheele, Local Journalism Initiative Reporter, The Hinton Voice