Half of income in MH is fixed income
By Chad Ingram
Published Dec. 19, 2017
Of the annual collective income of the residents of Minden Hills township, about half of it comes from fixed income sources – that is, pensions or investments.
Auditor Oscar Poloni of firm KPMG visited Minden Hills councillors during their Dec. 14 meeting with a what he called a state-of-the-township report, an in-depth analysis of the municipality’s finances.
“Really, what we wanted to answer was, how are you doing, from a financial perspective?” Poloni said.
He said this included asking questions of whether the municipality can deliver all the services council wants at the level it wants, and if the municipality can pay its bills on time.
While the latter may seem an odd question for a municipal government, “I’ve had municipalities use federal gas tax [funding] to pay salaries.”
The analysis used three financial indicators: sustainability, flexibility and vulnerability.
Sustainability means assessing whether a municipality can continue operating without raising the tax burden to an unreasonable level or issuing new debt.
Flexibility means assessing whether a municipality can increase available sources of revenue jeopardizing affordability, and vulnerability means assessing how at-risk a municipality may be from changes in revenue it doesn’t control.
Under flexibility indicators, Poloni’s presentation showed that about half of total income collective for residents of Minden Hills comes from fixed income sources, mostly pensions and investments.
The total for reported collective annual income is about $180 million. That includes only year-round residents of the township.
Poloni noted this means about half of every dollar being used to pay property taxes in the township comes from a fixed source, which is high. Accordingly it’s more difficult to impose large tax increases than it would be in a community with more working people, as salaries tend to increase over time.
“Your level of discretion, as to how much you can increase, is actually a lot more constrained,” Poloni said.
Overall, the township fared well on Poloni’s assessment. Its operating expenses increase at the same level as assessment; it increases its reserve balances; tax increases are consistent with income increases. It carries little debt and is not reliant on grants to make capital investments.
One area where the township lagged behind comparable township was in capital re-investment.
“When we look at how much you’re re-investing, your numbers are OK, they’re not fantastic,” Poloni said.
Mayor Brent Devolin asked Poloni was he thought of the concept of debt being a revenue-driving tool. It’s become very common in recent years for municipalities that are indebted to receive more grants from upper levels of government.
“Making blanket statements about debt is incorrect,” Poloni said, adding that circumstances vary.