Statement from Mississippi Mills Treasurer: "Sustainability…. Are we there?"

Posted on Wednesday March 13, 2019

During the March 12th Special Budget meeting, Treasurer Rhonda Whitmarsh provided an overview of how financially sustainable the Municipality is. The full statement is below.

Being sustainable means we have the funds to pay for both operating and capital needs now and into the future.

Over the last 5 years, the municipality has made great strides towards sustainability by completing an asset management plan (AMP) and long term financial plan (LTFP) and sticking to them.  The plans themselves however had limitations as they were based on the best estimates that we had at the time, both for operations and capital, and were projecting all the way to 2030.  Based on what we knew, I felt we were following the right path and that the municipality would be in a sustainable financial position by the time we reached 2019 which was why the tax revenue increases of 7% were dropping to 2.5% with no new long term debt being proposed past 2018.   The Province is now legislating further changes to asset management planning which will in turn require us to update our long term financial plan to support this initiative.  It is unknown at this time what that will look like

 

Over the past 5 years circumstances have changed whereby the original LTFP targets of 2.5% tax revenue increases from 2019 to 2030 does not necessarily provide enough funding to cover both operating and capital needs.  Every time there is a change to the original plan, there is potentially a long term financial impact to the future.  Some examples are:

 

  1. Projects like bridges and facility upgrades that come in 2-3 times the estimated budget
  2. The exclusion of some projects in the original plan simply because we just didn’t have visibility on them.  Examples are the LED streetlight conversion and the proposed downtown renewal project.  The original focus was on core assets such as roads, bridges, vehicles and equipment.
  3. Operational items that came forward that were not expected, taking away available funding for capital.  In 2019 alone we are seeing added costs for contracts, wild parsnip, winter control, etc.
  4. The possible loss of Ontario Municipal Partnership Funding (OMPF) starting in 2020 that the Province has announced pending their review of the program
  5. And the potential impacts of the new asset management regulation

 

The original intent of both the AMP and the LTFP was to inform Council about asset replacement needs in advance of the budget and inform the public of potential tax impacts of these decisions not just for the current year but into the future.  Our focus, and the decision to have 7% tax revenue increases was to have enough funding to appropriately invest in capital improvements, be they replacements or major rehabilitation.  The evidence of those decisions is shown on the charts included in the budget package on pages 21-23 (use the link at bottom of this article to view the budget package).  There is still, however, much work that still needs to be done.

 

Near the end of April or early May we will be having a session on Asset Management planning with examples as to how decisions made today about asset replacement impact the future.  Not doing something could drive up the cost when it is completed, make the problem worse that it originally was, result in critical failure,  increase operating costs for maintenance, increase downtime while being repaired and could expose the municipality and residents to increased risk.  Asset management planning will allow Council to make informed decisions and communicate those to the public and then annually report back to our residents on our accomplishments.  A sound asset management plan and long term financial plan should include the required funding such as tax or user fee changes that will be needed to move us towards future sustainability.

 

Rhonda Whitmarsh
Treasurer
Municipality of Mississippi Mills