Mayor Matthew Shoemaker commended city hall's monetary moguls last week for ending the fiscal year with a $6.3 million surplus, even though the lion's share of the surplus resulted from lucky breaks.
"We've got a significant portion of that surplus attributable to lack of ability to fill certain positions," the mayor said.
"The 2023 surplus as a percentage of the levy is 4.7 per cent," said Shelley Schell, chief financial officer and treasurer. "The five-year average is $3.1 million, or 2.4 per cent of the levy."
Although the city has a six-year-old policy on what to do with budgetary surpluses, councillors agreed to disregard that policy and set aside the unusually large amount of cash as mad money – a nest egg reserved for one-time projects.
According to the surplus policy set by city council in 2017, 40 per cent of any surplus is to be allocated for tax stabilization, 30 per cent for capital reserves and 30 per cent for long-term debt.
In addition to 'gapping' issues (problems filling some positions), a larger-than-expected windfall from investment income and a break on long-term disability rates also contributed to the 2023 surplus.
Schell says none of these trends are expected to continue.
"It is not anticipated that surpluses due to these factors will continue as the norm," she said in a report to city council.
"The 2024 budget increased investment income by $1.5 million, which will result in less of a surplus in 2024. Future years will have a negative levy impact when the Bank of Canada prime rate decreases from its current level of five per cent.
"Gapping should decrease once employment challenges are mitigated. The surplus from the long-term disability rates was generated while the city was in a rate guarantee position with the previous provider, which ended in 2023."
While Schell doesn't usually recommend ignoring the 2017 surplus policy, she said "with the higher surplus than normal, an opportunity is present to address council priorities that would require one-time funding, such as the housing action plan."
Here are the reasons she gave for allocating $6.3 million to feather a contingency reserve for future direction from city council:
- tax stabilization reserve is at the target level
- capital reserves require additional funding beyond what has already been approved by council. Additional amounts will provide some short-term relief but a more formal plan is required to grow the reserves to cover asset lifecycle and replacement costs long-term. The long-term financial plan is nearing completion and will provide a recommendation to achieve this
- the maximum level of internal debt under the debt management policy is 40 per cent of uncommitted reserves. As at Dec. 31, 2023, this level has been exceeded with no room for future debt. Additional reserve contributions would bring the level in line with the policy
"Staff is recommending that the full surplus be transferred to the contingency reserve," Schell said.
"Council will have flexibility to direct the use of the funds as one-time funding projects arise in the future. While the funds are uncommitted in the reserve, this will increase the level of internal debt allowed and bring it in line with the current actual level."
The following are further briefs from last week's city council meeting:
- the city will give a $15,000 economic development grant to Wolowich Tool Repair to support a business expansion at 690 Black Rd. Wolowich specializes in repairing and refurbishing industrial tools, in sectors including forestry, agriculture, renewable energy, mining/critical minerals, transportation/aviation, water technology, and heavy industry. Three to five new jobs will be created
- Sault Ste. Marie Police Service is offering to sell a used pickup truck at a price the city can't refuse. The city's parks division is really needing pickups these days and police have 2014 pickup truck they're willing to part with for $15,000. City council voted last week to pay for the nine-year-old truck by putting off a planned $26,000 purchase of a 60-inch rider deck
- the 2024 road resurfacing program was approved, along with the usual caution from city staff that we aren't spending nearly enough on our roads
- something's rotten at the Ermatinger-Clergue National Historic Site. A report received by city council last week shows a lot of things are rotting there. For example, the east kindling shed is in "extremely bad shape and could crumble any day." The west shed (garbage and wood) isn't much better and the roof on the Clergue Blockhouse is said to be in the "same desperate condition as the Old Stone House cedar shake"
- Molson Coors Beverage Co. will continue pouring beer at GFL Events Centre for the next three years, with an option for a further two-year extension. The brewer will make annual payments to the city of $40,000. That's up $3,000 from this year
- SNT Solutions Inc. sold the city a 10-ton portable asphalt recycler for $203,520
- Colin's Haulage Inc. of Greater Sudbury was awarded a $129,658 contract to remove crumbling asbestos from the ceilings of the four corners of the James L. McIntyre Centennial Library. Small amounts of the trowelled-on acoustic finish have been falling onto the library shelves and floors
- $18,375 in tourism development funds will be distributed as follows: Fringe North International Theatre Festival ($5,000), Ontario Junior Archery Challenge ($3,000), Sault Ste. Marie Kennel Club All Breed Conformation Show ($3,000). Salty Marie Trails Festival ($5,000) and Spring International Swim Meet ($2,375)
- public works will be getting a $566,807 motor grader from Brandt Tractor Inc. of Regina. Brandt was the only bidder
- J.L. Richards & Associates Ltd., an engineering and architectural firm with offices in Sudbury, Timmins, North Bay and four other Ontario locations, won a $211,967 professional services job as part of a $3.1-million installation of rooftop solar panels on the transit building at 111 Huron St. The city will pay 27 per cent of the total project cost
- the city will buy a $275,464 split-body gasoline trash compactor from NexGen Municipal Inc. of Burlington. It will be used on trash from city parks. Nexgen was the only bidder
- FST Canada (Joe Johnson Equipment) of Innisfil, Ont. was chosen to supply a vacuum body catch basin cleaner to the city for $776,448
- Tamar Tucker was appointed to the Downtown Business Improvement Area (Downtown Association) Board from May 13, 2024 to December 31, 2026. She replaces Stephanie Harman, who has resigned
- six environmental sustainability initiatives received city support: Invasive Species Centre Himalayan Balsam Community Pull 2.0 Project ($3,450), Sault Climate Hub Little Forest ($5,280), Sault Search and Rescue E-Bike Project ($8,786), Sault Ste. Marie Museum LED Retrofit ($1,972), Algoma Fish and Game Club Invasive Species Sign Project ($886) and NORDIK Institutes Shoreline Clean-Up Project ($7,500)
- a $2-million contract was awarded to Sault Ste. Marie's Trimount Construction Group Inc. for reconstruction of Lake Street between Queen Street East and the entrance to Bellevue Park. Trimount's original tender was $5.4 million, more than twice the city's capital budget allocation of $2.5 million. The price was haggled down by eliminating most of the underground work