Cornwall’s 2021 audit opens door to questions over debt and reserves

0

Content of the article

Cornwall City Council received an encouraging 2021 audit report last week from Jamie Pollock, CPA, CA, with MNP LLP.

Content of the article

“I can say the city is in very good financial shape and you’ve had a good year…we’re prepared to issue an unqualified audit opinion on these financial statements,” he said.

Cornwall ended 2021 with a surplus of $2,173,254 in its operating budget, as well as a surplus of $1,145,332 in its water and sewer budgets. The presentation of the annual report was an opportunity for elected officials to discuss the City’s level of indebtedness.

Com. Dean Hollingsworth asked Pollock if he thought the city was taking on too much debt, indicating that it was a belief among some fellow councilors. The short answer was no.

“The City has entered into financing agreements (long-term debt) for the sum of $16,239,000 (in 2021),” reads the agenda. “This includes funding for the (Municipal Works) Yard ($4 million), Brookdale CN Viaduct ($2 million), Fennell Crescent Pump Station ($2.1 million), waste management torch replacement ($1.6 million), housing service projects ($2.5 million). million), park and transit equipment ($1.4 million) and reconstruction of York Street ($1.2 million).

Pollock said the ratio of annual debt service payments to operating revenue is 3.47%, and while that’s a slight increase, the city can afford to take on more. “good” debts if it is advantageous for the municipality.

“For a single-tier municipality, I recommend you never exceed 10% (debt),” Pollock said. “With the city, I recommend it be a little below 10%… most of your debt levels are considered good debt. It is for assets used by residents and taxpayers, and they produce revenue for the municipality in one way or another, providing services to the community.

Content of the article

  1. Cornwall ends 2021 with a surplus of over $3 million

  2. Cornwall's 2022 budget, along with its $80 million tax, was swiftly passed by city council on Wednesday evening.  Handout/Cornwall Standard-Freeholder/Postmedia Network

    Cornwall council approves 2022 budget with $80m levy

  3. Earlier this year, we calculated that Tax Freedom Day fell on May 24 in 2021. This is the day of the year when the average family has earned enough money to pay the taxes imposed by all three tiers. of government - federal, provincial and local.

    Cornwall clears 2020 with $855,000 surplus, two reserves too low

“Are we in good shape from a reserve point of view, or are we okay? asked Hollingswroth.

Pollock explained that while the city’s reserve coverage increases relative to operating expenditures, standing at 14.06 per cent, he would like to see a municipality the size of Cornwall aim for 15 per cent.

“You have good reserves but you’re not quite there based on the policies you’ve established and the targets you need to achieve. So you still have room for growth to achieve those goals…and at the same time, based on updated asset management policies and plans, those reserve fund amounts will change every year…there has been an improvement positive over the past few years,” says Pollock.

In the audit report, it was noted that operating revenues were increasing each year, while operating grants and transfers were decreasing.

“As I throw around a lot of numbers, the financial metrics that really sum up your financial situation are, when you look at your back taxes, your percentage of unpaid tax versus your current levy is only three percent and your total levy is three percent. It’s been slowly coming down over the last two years, so the amount of back taxes you have overdue is very small compared to the amount of taxes you’re increasing each year,” Pollock explained.

Content of the article

Hollingsworth also asked for clarification on the city’s degree of responsibility. Tracey Bailey, Cornwall’s chief financial officer and treasurer, said the city had liabilities of around $120 million, with $52 million being a long-term commitment for debt payment and the remainder for future expenditures related to the Cornwall landfill.

The Cornwall Accounting Department will undertake a review and update of its Long Range Financial Plan (LTFP) in 2022. Under the LTFP, the City’s policies relating to capital assets, debt management, reserves and investments will be examined.

[email protected]

Share.

About Author

Comments are closed.