A good-news announcement may be around the corner for Brockville, Mayor Jason Baker hinted this week, as councillors received encouraging news about the city’s finances.
Despite a revenue shortfall due to the COVID-19-related shutdown, Brockville finance director Lynda Ferguson said city hall does not expect any cash-flow problems this year.
Meanwhile, Baker suggested a good-news announcement is pending concerning a new “asset” for the city, but would say little more until it’s official.
“There’s an opportunity that’s before council that we’ve deemed to be the number one priority of the community,” said the mayor, promising more details in the coming weeks following closed-door negotiations.
Earlier this summer, Ferguson reported that the city’s operating budget is projecting a surplus of approximately $659,774, based on an estimate at the end of July.
The report also pointed to a revenue shortfall, due mainly to facility closures, reduced interest rates on city accounts and the economic slowdown, of $1,955,400.
Until recently, city officials were not certain whether the city would have the cash on hand to pay all its bills this year; a cash-flow crunch would have required either dipping into reserves or borrowing.
The worst-case scenario, noted Ferguson, would have seen the city face cash-flow issues as early as this month, while in the best-case scenario it faced a smaller problem at the end of the year.
“The worst case scenario has not happened, which is exceptional news,” said Ferguson.
The city dodged the bullet because enough people paid their taxes, despite the economic slowdown.
Not only that, but the city appears to be exceeding its best-case scenario as well, as Ferguson does not anticipate cash-flow issues in 2020.
“The percentage of taxes received are in line with the current taxes received this time last year,” said Ferguson.
She cautioned, however, that this more favourable position is based on that surplus projected in July, and that number could change before the year is over.
At its first virtual meeting since the pandemic shut down much of Ontario, city council’s finance and administration committee on Tuesday welcomed Ferguson’s report, though the good mood was tempered by the continuing uncertainty over COVID-19.
Ferguson acknowledged the cash-flow situation will get “tight” by February.
“Once we bill our taxes at the end of January and it starts coming in fairly early in February, we’ll squeak by,” she said.
Also helping the city’s position is emergency funding Brockville is getting from senior levels of government under the Safe Restart Agreement. Brockville is getting $1,313,900 in the first round of that funding, as well as an additional $102,647 to support the city’s transit system.
But in response to a question by Coun. Jeff Earle, Ferguson said the cash-flow projection does not factor in the uncertainties of a second wave of COVID-19.
Coun. Larry Journal, the finance committee chairman, was sanguine about that possibility.
“I believe that we’re still in a pretty sound financial position and even if there was a second wave that should hit, we are likely to remain in a pretty good situation,” said Journal.
Earle warned colleagues not to succumb to “the illusion that this is over.”
“I just want to make sure no one is taking their foot off the gas yet because that’s not what the projections are.”
After an earlier report on all the financial decisions the city has taken since the start of the pandemic, Baker praised city staff for taking some difficult measures early on, and thanked the unionized city workers for their co-operation.
“Mitigating as early as we did, I firmly believe, gives us more opportunities now to climb back out of this,” said the mayor.
The encouraging news prompted Journal to attempt reversing one of the decisions council took in the wake of COVID – cancelling this year’s $500,000 contribution to the city’s priority reserve (formerly the arena reserve).
Journal referred in part to a closed-door meeting at which councillors discussed a pending agreement that Baker described as a “potential number one priority” for the city.
While that $500,000 was withheld from the reserve fund as insurance against any cash-flow problems, the designated reserve is considered the funding source for the new “priority,” on which Baker hopes to provide more details in the coming month.
Committee members decided it was not necessary to move the money into the reserve just yet.
The priority reserve was initially set up to fund a twin-pad arena in Brockville, but Baker would not discuss any specifics of the in-camera meeting or its subject, citing the sensitivity of ongoing negotiations
Baker did refer to the matter in question as “the building of an asset” for the city.