Inflation might be wreaking havoc on personal and business budgets in Nelson but the municipal one is weathering the storm, says the city’s chief financial officer.
Chris Jury said the city has done a “good job” of putting together its numerous reserves in its 10- to 15-year financial plans, he said recently during a second quarter update at City Hall during the monthly city council meeting.
Coun. Jesse Woodward had asked if the pressures of inflation had negatively affected the city’s reserves.
“Do you feel that our capital reserves are still holding in a good place, that we don’t have to do a tax increase when a huge asset replacement comes?” he asked.
Jury said the city ensures there are contingencies in the budget for huge asset replacements, and that pre-planning for those situations allows the city to put money aside well ahead of the needed project.
“I’m hoping that this inflation that we are seeing right now does not continue for 10 to 20 years, that it’s sort of a short-term piece,” he said. “So I wouldn’t see any reason to be concerned.”
The city intends to keep an eye on planning and keeping its reserves healthy, Jury added. And its investments, which the city could use in case of an emergency, are also well in hand, he said.
“Investment income is ahead of last year and budget, despite the short term paper loss in value of bond fund holdings,” Jury explained. “With the rise in interest rates, the income generated on investments is up over the prior year.”
He explained that the city has a well balanced portfolio, which allows it to refrain from liquidating investments in the short term and avoid locking in any capital losses.
In the black
City taxes have been billed and collected, showing a five per cent budget increase over last year — a number supporting the four per cent tax increase this year, plus an increase in new construction permits.
• Transit revenues — although increasing after the drop in ridership due to COVID-19 in 2020 — are only at 80 per cent of pre-pandemic levels. “At this point it is unlikely we will see a full return of international students and bus ridership in fiscal 2022. Still, revenue from passes and coin are up 30 per cent over 2021,” said Jury.
• Nelson Hydro is on budget and ahead of prior year revenue. Power usage had gone just above budget in the early months of the year, having then normalized towards the mid-point. “As of today, the trend is looking like revenues will come in at or slightly ahead of forecast, though the key determinate will be the temperatures that come in the November and December period,” said Jury.
• Sales of city services has increased this year, including a budgeted increase to the resource recovery fees, as well as an increase in revenues from the RCMP to cover the 2022 secondment wages.
“In addition, the current year includes higher expectations for post-COVID-19 revenues from parking, youth centre camps, and other revenues,” said Jury.
In the red
Protective services (Nelson Police Department) expenses are up from the prior year, including some adjustments to police staffing, including the introduction of a deputy police chief.
“The department has had some operational challenges this year, with several officers off injured or unavailable for duty. This has led to an increase in overtime and associated costs,” said Jury in his report to council.
A lack of available training opportunities over the past three years due to COVID-19 has increased the need for training in the current year to ensure members maintain a high standard of competency, he continued.
“It is expected that these cost pressures will continue to the end of the year,” Jury said.
• Nelson Hydro expenses were in line with the budget and the prior year.
Power purchases are up from last year, in line with a corresponding increase in sales and an increase in rates from FortisBC.
Contrasted with two windstorm events in the first half of 2021, and none as significant in 2002, meant that storm repair costs were significantly lower this year.
Jury said the planned vegetation management program was progressing well, with 85 per cent of the $850,000 budget spent to-date, and the remaining budget will be used by year end.
“The focus has been critical areas in the North Shore and city, with both these areas already showing improved reliability and reduced tree related trouble calls,” Jury said.