Council had its first budget meeting on January 24 to discuss the 2025–2029 financial plan, with an emphasis on 2025.
Last year, council set itself a limit of a nine percent increase to tax rates in 2025. But, last year they went over that by $380,000. Those increased expenses were pulled out of operating surplus funds. This effectively means that 2025 budget has already been raised 3.8 percent to cover those costs going forward, leaving staff with only 5.2 percent to play with.
“Staff developed their draft budgets and then each director reviewed their budget’s with the CAO and CFO,” says CFO Natalie Wehner. “The CAO and myself sat down and met with the directors. We went back all the way to 2019 and we looked at all of their budgets. We reviewed if things had been budgeted and never expended or they were never going to those amounts. We also reviewed the opposite, looking at places where they were always going over budget.”
Once that was completed all of the directors went back they updated in the system. “I did a final review of it to ensure that all the changes were made and everything going forward looked like what we had agreed upon,” says Wehner.
Before we start making decisions, I want to talk about reserves. There’s statutory Reserve funds those are funds that are limited to what you could utilize them for so there’s things like the Community Works funding, the Growing Communities funding, where the provincial government gives us rules and regulations. There’s other Reserve funds that are established by bylaw so we can only utilize those Reserve funds for how it’s outlined in the bylaw. Then there’s capital reserves that are not defined by the bylaw, but they can only be used on Capital Expenses. It cannot be used to pay for ongoing operational cost. The other type of Reserve funds we have is called operating surplus funds. These are funds that we have in excess in a year. A budget is just a guideline, so quite often you’ll have excess funds at the end of the year and it runs into this operating surplus. In 2024, council adopted a policy that set the minimums and the maximums for this operating surplus. That was a two-month minimum—that means the district can meet emergency needs if something unforeseen happens. It can be utilized for both capital and for operational so definitely valuable to have that two-month minimum. The maximum is about four months. If you have more than four months of your operational needs, we should be looking at rolling that over into the capital fund. That means it’s also a mechanism of funding the capital reserves and building up our capital reserve to maintain our infrastructure.
She says that the operating surplus for the general fund, it is about $13 million. “The two-month minimum is about 2.1 million and the maximum is about $4.3 million. Based on that information there’s $8.7 million extra. These are things council can think of during this budget process for projects. But I do recommend that operating surplus only be utilized for one time only capital expenses. It’s not to go and meet operational needs because that just kicks tax implications down the road.”
She says there’s also $1.7 million in the water surplice. These are funds for capital expenses on the water infrastructure, from the pumps to the lines to the reservoir. “My concern is that’s not sufficient to meet needs there. Same with sewer. We have about $2 million. That is the total amount we have is for all of our sewer treatment facilities, all of our sewer lines, everything to do with sewer. Water cannot be transfered to sewer and general cannot be transferred to either. So while it looks like the district has a ton of reserves—$38 million for General—you have to think of all of the buildings that you have, all of the roads you have and all of the cost that goes towards that. One building alone could use $20 or $30 million, which would use a significant amount of that. You would leverage that against grants, but that gives you a truer picture of where we are at with our reserve funds.
She says for 2025, the Public Works operating expense budget is going down slightly, while all the other categories have slight increases.
“After a few refinements the final budgets were uploaded into the system and then compared with Year Over Year (YOY) reports to balance.”
The final draft budget has an increase of $771,771 over 2024, which equates to approximately a seven percent increase to property taxes or $47 per average residential house. “Staff are happy to report that there weren’t any service level reductions required to meet the mandate,” says Wehner.
However, notes Wehner, the draft budget does not include capital and special projects, though these projects are frequently funded through grants, reserves, and operating surplus. And while this may not have a tax impact this year, it may mean an increase to operating costs in the future.
The largest expense, as usual, is the Community Centre, which will cost the district $3,864,476 in 2025, up from $3,676,590. That’s followed by General Government Service, at $3,971,513, up from $3,803,620, and then Public Works, which drops to $2,738,565 from $2,843,234. These three departments make up 71 percent of the $14,977,372 operating budget.
Finally, says Wehner, the Grant-in-Aid and Fee-for-Service budgets were “budgeted the same as in prior years until council has approved the 2025 applications.”
Councillor Gulick asks if staff thinks that water and sewer reserves should be higher. “We cannot buff those up with reserves that we have right now. Those dollars can only come from water and sewer charges, if I am understanding that correctly.”
CAO Lisa Scott says that is correct. “If we had to replace a major section of water line or sewer line, what we have in reserves is likely not adequate to be able to fix that, depending on the size of the repair. And yes, we cannot move what’s in those other statutory reserves to the water and sewer.”
So, asks Councillor Hofman, what happens if there was an emergency and you needed $5 million? “I know we had a pretty contentious discussion last year of how much we already bumped this and how it will take time for reserves to build up. I’m not sure if we’re talking about increasing it even further or just showing our vulnerability. What is the mechanism to follow? Are we allowed to take a loan and deal with it that way?”
Wehner says that the district can borrow money in the case of an emergency. “You can borrow up to 30 years, but it is about a six month process to get approval for a loan. If it is deemed an emergency by, say, Northern Health, we can use that order to go and borrow money. But if it isn’t a health emergency, we have about a six month process to get approval.”
While the budget has yet to be approved and can change between now and May 15 (the last day the district has to submit the budget to the province), this part of the budget is typically fairly stable, with much of the discussion and change happening in Capital and Special projects.
Trent is the publisher of Tumbler RidgeLines.
