County reserves low, auditor says
By Chad Ingram
Published May 3, 2018
Haliburton County’s reserves are too low, an auditor told county councillors last week.
During his presentation on the county’s 2017 audit during an April 25 meeting, KPMG auditor Oscar Poloni told council it may want to start building the municipality’s reserves balances.
Compared to similar municipalities, Haliburton County has low taxes.
“What we do see, however, is that reserves and reserve fund balances are on the low end,” Poloni said.
While Poloni stressed it was not the auditing firm’s place to dictate policy, he said the county’s current reserve levels put it in a place of limited flexibility. By the end of 2018, the county is forecast to have total reserves of approximately $2 million. Some auditors use 50 per cent of one year’s tax levy as a benchmark for healthy reserve levels. In the case of the county, that would mean having about $8 million in the bank.
“If you think about your personal lives, your personal finances, I’m sure you have savings, you have RSPs, what have you, you have those financial resources to allow you to deal with future events and plan for the uncertainties,” Poloni said. “This, again, comes down to flexibility, and right now, from a reserve perspective, you have none.”
“That’s not a criticism, that’s an observation,” he added, and went to suggest that council might consider a multi-year plan to increase reserve fund balances.
“Your taxes are on the low end, so you may want to consider a phased-in tax increase, and I can appreciate in an election year this is probably not going to go over well, but at the end of the day, long-term sustainability is something you may want to look at.”
Poloni said the county’s debt is manageable and low compared to similar municipalities.
“So this isn’t a place where your municipality has a runaway issue with debt, and oftentimes what people will say is, our reserves our low, and our debt is low, and because of that, we’re OK. And I can appreciate that logic. The only comment I would make is a couple of things . . . In some cases, you’re going to want reserves for things you can’t borrow for.”
The Municipal Act prevents municipalities from borrowing for operating expenses, for example.
“I don’t necessarily advocate, this is personally, for a pay-as-you-go approach,” Poloni said, joking that if he’d had to buy his house in cash, he’d still live with his mother. He suggested that acquiring some debt to be paid off in an intergenerational way is not necessarily a bad thing, since decades of taxpayers would benefit from those infrastructure improvements.
Also, Poloni said the county is beginning to lag on the replacement of its infrastructure.
“Based on our analysis, your replenishment of your capital infrastructure is actually falling behind with what we consider to be your replacement plans,” he said, adding that on the current path, at some point, the municipality’s assets would begin to deteriorate.
Councillors thanked Poloni for his presentation.
“I think this kind of reporting makes us better,” said Minden Hills Mayor Brent Devolin. “It makes us make wiser, strategic decisions.”