Wednesday, April 25, 2018

Report on Municipal finances.

At the regular meeting of council on April 18th, a deputation was heard by financial auditor BDO Wood Gundy concerning the Municipality's 2017 finances. A short version of the presentation could be summarized as follows: though the Municipality ran a deficit of just over $50,000 in 2017, its finances are currently in good shape. Despite the condition of its finances however, the Municipality faces a very significant budgetary challenge: how to deal with the Municipal landfill sites as they near the end of their life-spans under current approvals. Click here to see the auditor's full report.

The auditor's financial report specifies the Municipality's current liability for the future costs of closing the Scoble and Sandhill landfill sites at a whopping $747,797 (which is up dramatically from the 2016 liability estimate of $327,350).
As I understood the auditor's explanation, this figure represents the Municipality's liability to date based on estimates of remaining useful life. In other words, the current liability is just a portion of the anticipated total final cost, the remainder of which will continue to be factored in year after year as the landfill sites each get closer to being full. When it becomes necessary to close one or the other site, and the full amount of the liability for that site comes due, there will need to be sufficient funds available to cover the cost - this is a big budgetary challenge.


While growing a reserve fund large enough to cover the cost of dump closures in time to meet the end of their respective life-spans seems a daunting enough challenge as it is, there are also some important complications to take note of. First, the auditor's report indicates that they estimated the Scoble site's remaining useful life at 33 years, whereas in reality it is just about full already. Second, the cost of closing landfill sites is constantly going up, meaning the future cost of landfill site closure will likely be quite a bit more than current estimates indicate.

Given the potentially crippling costs of closing landfill sites, the big question becomes: what are the Municipality's other options, if any? In my next article I hope to provide a look into what those options might be, and which avenues have already been explored by the Municipality.

Correction 13/05/18:
In correspondence received by me from the Municipal Clerk, it was pointed out that while the Scoble landfill (East Oliver Lake dump) has in fact 0 years remaining under current approvals, the 33 year life-span used by the auditor to estimate the Municipality's liability was a purposeful assumption, and based on the Municipality's recent intention to apply for an expansion of the site. A resolution to proceed with the expansion of the Scoble site was passed at the meeting of May 9, 2018.