As a consequence of the provincial government's decision to suspend grants in-lieu of property taxes for certain Crown Corporations, the City of Regina is now required to fill an estimated $11 million gap in our municipal budget. That's about $8 million this fiscal year. Minister Harpaurer suggests that cities should simply dig into their reserves to fix the problem. In the long-term that would be irresponsible. It's also indicative of the provincial government's lack of knowledge about how municipal finances actually work. Here's a summary of how reserves work.
- The City holds a number of reserves to respond to unexpected emergencies or revenue shortfall.
The December 31, 2015 balance of the reserves reported in the 2015 Annual Report was $213.74 million. The City is currently working on the 2016 year end to produce the 2016 Annual Report and so the 2016 balances are not yet available.
Reserves enable the City to smooth the effect of spending decisions that impact property taxation, finance unexpected/emergency spending requirements, minimize our use of debt to fund projects and support het City’s credit rating. The reserves are also used to match revenues and expenses of specific services such as landfill operations and development, fleet replacement and asset revitalization. This means that the current users pay to support the future replacement or renewal of the asset.
The City of Regina’s reserves are relatively low in comparison to the value of our assets. The cost of the capital assets on December 31, 2015 was $2.8 billion.
The City is in the process of completing a review of our reserves that will look at the appropriateness of the number, the size of the reserves held by the City relative to their purposes and best practices. It will also ensure the reserve policy aligns to the Official Community Plan , Long Range Financial Plan and the Financial Policies Framework.