North Dumfries residents faced with 9% tax hike thanks to $750K deficit
A tense budget meeting Sunday had North Dumfries township staff trying to explain the existence of a surprise deficit of nearly $754,000 and councillors trying to assuage the concerns of angry residents who were faced with the prospect of a nine per cent tax hike in the coming year.
The proposed 2015 tax increase amounts to an extra $63 for the average household for the year. Last year, the township increased taxes 2.96 per cent on its $3.6 million budget.
Initially, a 23 per cent hike for the coming year was suggested, but that figure was whittled down as councillors opted to cut spending and raid reserve funds in order to address the deficit. Residents packed the three-hour meeting which revealed one budgetary misstep after another, including:
- Inadequate reporting of the township's finances.
- Pervasive departmental overspending.
- A failure to collect residential and commercial fees owed to the township.
- The continued usage of 25-year-old accounting software that runs on MS DOS.
Councillors Derrick Ostner and Rod Rolleman, who both assumed office in December, asked staff why they had not received financial updates on all departments after requesting it months ago.
That’s the system we’re working on. Does that not frighten you a little?- Mayor Sue Foxton, referring to North Dumfries’ DOS-based accounting system
It was revealed that a quarterly report, which would have alerted councillors to the deficit sooner, had been deferred and never transpired.
Steve Stone, Acting Chief Administrative Officer, only responded, "It should have been done." Stone also said he was directed by council not to speak to the media.
Liam Gott, who was hired as director of finance two and a half years ago, said he had been instructed to defer the report due to the election last year, which was held on Oct. 27. He said he did not know the reasoning, and did not say who instructed him, only that the decision to defer the report would have been made at "the CAO level."
Stone was director of planning at the time, and the CAO was Rodger Mordue.
"The full magnitude of the deficit was never presented to council in a report," said Gott, adding the deferred report would have made the size of the shortfall clear.
"I believe I’ve caught up to a certain point where the quarterly reports will be coming out in a much more timely fashion than they have been in the past."
Township departments ran over budget in 2014
The following township departments went over their budget in 2014:
- General Administration by $51,000.
- Finance by $130,000.
- Protective Services by $17,000.
- Roads by $237,000.
- Recreation by $77,000.
- Planning by $85,000.
Gott said departments went over budget because there were higher utility, winter maintenance and repair fees than was anticipated. Additionally, a land sale that never occurred was also budgeted for in 2014.
Mayor Sue Foxton, who was a councillor in the last session of council, said departments previously did not have to report expenses that fell under a certain threshold. Now, departments will have to report all spending to council.
"No money was wasted. It’s just they thought if they needed something they went and bought it, even though they didn’t consider what was in their budget," said Foxton. "Now that will be monitored. It won’t be allowed. You will have to have the acting CAO sign, confirming any expenditures."
Township out $220,000 in monies it failed to collect
Foxton also said the township is owed $220,000 in application fees that date between 2002 and 2012.
Residents and developers would fill out applications for requests like severing a land lot, or starting a gravel pit or subdivision. The township often would pay the application fee, ranging between $250 to $2,000 along with any outsourced consultation costs, with the expectation it will collect the fee from the applicant at a later date.
Gott said collecting the fees would have been the responsibility of the planning department, which only came into existence two years ago. Before then, no-one tried to collect the money, said Gott.
The $220,000 is an amount the township can expect to get back over time. There’s an additional $83,000 that has been lost for various reasons, including applicant deaths.
Antiquated accounting software being used
The township is currently using accounting software purchased in 1990 that runs on MS DOS.
"That’s the system we’re working on. Does that not frighten you a little?" said Foxton in an interview with CBC News.
"It doesn’t have a financial reporting capability, nor has it the ability to talk to other modules or financial systems. When it comes to financial reporting, it’s pretty cumbersome. I guess 25 years ago, they didn’t require financial reports," said Gott.
Council approved the purchase of new software for 2016, but decided it was urgent to buy it this year. Council plans to set aside $80,000 for the new system.
Gravel reserve fund will be used
Coun. Neil Ritchie and Coun. Rod Rolleman both tried to emphasize to residents that despite the hike, the township would still have the lowest tax burden among any municipalities in the region.
A 23 per cent tax hike was initially proposed, but in order to keep it at just a nine per cent increase, councillors cut down contributions to the reserve funds for the roads and fire departments. Councillors also deferred two recreation projects, and made the decision to move all council operations to the North Dumfries Community Centre.
The town hall building at 1171 Greenfield Road will be put up for sale, to avoid expensive repairs needed in the near future.
The remaining deficit will be paid by money taken out of the gravel reserve fund.
Council will be given the new budget on Monday night. They are expected to approve a final budget on April 14.