The Village of Cache Creek needs to look at either increasing revenues to maintain current services, or reduce service levels, according to a presentation to council at the April 6 open meeting. Council was also told that continuing to use money from the Landfill Legacy Fund to fund operations is not sustainable.
Mario Piroddi of BDO Canada gave an overview of the village’s draft audited financial statements for 2020. They showed that in 2020 the village had revenues of just over $3 million, of which $780,180 (about one-quarter) was property taxes, which Piroddi said was on the “lower side” compared with what they see in other communities.
Expenses were also just over $3 million. While the 2020 flooding increased some expenses, money spent on recreational and cultural facilities such as the pool was down because of closures and the effects of COVID-19.
Looking at the 2020 change in net financial assets, Piroddi pointed out that the village was showing a surplus for 2020 of $73,174. However, he added that in 2020 the village had received $460,000 in COVID-19 restart funding from the Province; without that, he said, the village would be facing a deficit of $390,000.
“Historically you’ve been using the Landfill Legacy reserve to help fund operations, and that was the intention of previous councils and yours, but we’re seeing that’s now coming to an end.”
Piroddi walked council through its accumulated surplus of $16,567,335, pointing out that $13,635,063 represented tangible capital assets (buildings, etc.) and $1,152,842 was restricted to community works and COVID-19 safe restart plans, so could not be spent freely on whatever council wanted. The Landfill Legacy Fund stands at $1,132,706, and Piroddi said council has to ask if it is really money that is available to be spent anymore.
“That’s there for emergencies: if there’s a flood, if there’s a fire. Back that out and you’re left with $600,00 sitting in your reserves right now on an annual budget of $3 million, which is quite low. I wanted to make sure we highlighted that for council, because there is a concern, especially in smaller communities where you don’t have a large tax base and sometimes grants can be harder to apply for because of the way you would need to use them, that having a low level of reserve is problematic.”
He added that he knew council had been looking at this issue, and encouraged them to continue to do so.
Coun. Sue Peters confirmed that Piroddi was saying that continuing to use the Landfill Legacy Fund was not sustainable. “You’re saying that we need to be getting closer to having a proper reserve and a proper management program moving forward.”
Piroddi agreed. “When we look at how the Landfill Legacy Fund has been used and budgeted by previous councils to you and where it’s at right now, over the past two years we’ve seen it drop from $3 million to $1 million, and that money has been used to fund operations. Because now you’re down to the last piece of it, that’s where now you need to be looking at your operations and what it looks like without that money, because unless there’s something else happening there isn’t going to a replenishment to that reserve.”
Piroddi’s recommendation was that as council moved ahead with its budget and five year financial plan this year, its should look at service levels and what the costs of maintaining the current service levels are.
“Look at it from the perspective of ‘What revenues do we have to ensure we maintain those service levels?’” he said. “At that point the decision becomes either you have to increase revenues to maintain it, or you need to reduce service levels.”