Time is of the essence when it comes to dealing with the budget. Chief financial officer Karen Blow gave council an update and explained why the budget includes a 9.9 per cent tax hike. Mayor Jack Adelaar said that "this is not happy news" and council agreed that it would like to have some help going over the numbers. But the taxes need to be determined by the end of April and recruiting a committee and reviewing municipal finances takes time.
At the council meeting on Monday, January 9, Blow said, "I recommend that we form a finance committee. I've reviewed dozens of organizations and wanted to get council's feedback as to its purpose."
Blow added that she did not specify the role of the committee to deal with audits or with reviewing quarterly reports but envisions an oversight role.
Adelaar said, "I rather see the committee's role to be advisory. I would like to expand a bit to deal with other issues that relate to administration. I want it to be more of a super committee."
"I see that there is quite a need and urgency for a group other than council to review the financial situation," councillor Wolfgang Duntz said. "There has been the opinion that our finances are not in the best of health. I, myself, am not astute in reading financial statements and I think all councillors, except councillor Morse are not qualified to do that. I support establishing a financial advisory committee for a short term, maybe three to six months to get an independent review on our financial situation and come back to council with findings and recommendations." Duntz added that councils have standing finance committees for good reasons. He said, "Without outside advice, I am not sure council has the collective wisdom to make sound decisions for this term so it would be wonderful to have people come forward who are willing to help."
Councillor Andrew Stone said, "There are a lot of people on the island who have a deep resume and expertise on financial matters. Some have already expressed interest in being on the committee."
Councillor Alison Morse said that she looked at other municipalities and has found that many have audit committees. She explained, "The audit committee is often a subset of the finance committee and meets with the auditors. " Morse added that the committee takes on an oversight role when it looks at issues like risk management. As additional potential roles for the finance committee, she mentioned the task of looking for funding for capital projects and going over various versions of the budget.
Councillor Cro Lucas said that the people who would be effective on the finance committee could not be expected to make a long-term commitment. He said, "We are looking for people who can give good advice. If they are as good as we hope them to be, they are probably very busy. This is unpaid work and a huge job. I could envision the process taking three months and then the results would be brought back to council."
"We need to get advisory help on the budget," Adelaar said. Blow cautioned that the 2012 budget needs to move forward. Councillor Daron Jennings wanted to know if the budget could be amended. Morse said, "If the tax rates are set, they can't be changed. And they need to be determined by the end of April."
Blow said that there was urgency to find out about the potential of a tax increase.
She said, "Staff was asked to be extremely frugal when they prepared the expenses. Every manager feels that the budget is not adequate." In her presentation, Blow highlighted items that are placing demands on general taxation such as services, community planning, roads and capital projects. "One of the main expenses is the library roof. It is budgeted at $125,00 and there isn't a funding source for about $50,000 of that sum," Blow said. "We already put it off last year."
Blow also spoke about three items that haven't been included in the budget. She said, "We haven't made any allowances for any changes to the OCP that would incur external costs or the ongoing work for the Snug Cove implementation." The third consideration was in regard to wages of municipal employees. Blow said, "We are not a union operation and we had consultants look at the situation." Changes to the payroll have not been budgeted.
Adelaar stated that he is not happy about the 9.9. per cent tax increase.
Blow countered that there was consensus among management that the current budget did not allow enough resources to provide adequate services to the community. "Everything is status quo, everything is extremely frugal and the budget still comes in at a 9.9 per cent tax increase. We are a small community with a lot of expectations on the tax dollars," she said.
Council directed staff to provide the terms of references for a finance committee and is eager to hear from the public at the town hall meeting on Saturday, January 14, from 9 to 11 a.m.
