Council considers use of 2022 operating surplus to bring down potential tax levy

Tim Brody - Editor

Sioux Lookout Municipal Council is considering tapping into a $357,549 operating surplus as presented in the 2022 audited financial statements presented at the February Regular Council meeting, to bring down a proposed tax levy in the second draft of the Municipal budget of 6.76 percent.
Municipal staff had proposed allocating the surplus to: 1. Centennial Centre HVAC System: $276,534.97, 2. Municipal / Library Generator: $ 70,840.69, and 3. Transfer to General Reserve: $8,173.34.
Councillor Joan Cosco stated at the March 6 Special Council meeting where this was proposed, “I’m opposed to this plan. I would like to see part of the surplus, $245,000 put back into the budget for next year. That would give us a little bit of breathing room to come up with some concrete solutions to some of our costs. We have to make some hard decisions to get this budget down.”
She added, “I think we can be confident we’re going to have a surplus next year.”
Councillor Cory Lago stated, “I know this isn’t ideal. We always want to take care of some debt and get rid of some long-term payment and interest, but we also have a looming number that we need to deal with.”
Councillor Luc Beaulne stated, “I agree with using the surplus, but I would also like to see that number come down a little bit more. I believe there’s other areas that we have to start looking at as a Municipality to sharpen the pencil.”
The $245,000 proposed by Councillor Cosco would represent approximately a two percent tax rate decrease, bringing the possible tax levy down to 4.75 percent, Municipal Treasurer Carly Collins confirmed.
Councillor Reece Van Breda inquired what using all of the surplus would bring the proposed tax levy down to and was informed by Collins it would bring the proposed tax levy down to 3.85 percent.
Brian P. MacKinnon, Chief Administrative Officer & Municipal Clerk, confirmed Council’s direction to staff included:
*  The option that would have been presented at the Second Budget Meeting (i.e., requiring a 6.76% tax rate increase);
* use approximately $80,000 of the 2022 surplus to reduce the required 2024 tax levy;
* use $245,000 of the 2022 surplus to reduce the required 2024 tax levy;
* use all $357,549 of the 2022 surplus to reduce the required 2024 tax levy; and
* identify possible cuts to tax-supported programs/services to achieve a further 1% reduction in the required 2024 tax levy (i.e., identify options for Council’s consideration and deliberation to reduce the operating budget by a further $122,157)
Asked about any possible risk to the Municipality in using the surplus to bring down the potential tax levy, he shared, “Staff will almost always recommend the option that involves the least amount of risk, and provides a prudent financial option, typically related to reducing or negating the need for long-term debt, and/or to build reserves. There are many other viable options, one of which Council discussed at the last Budget Meeting, namely, to use the surplus to reduce the amount of revenues required from taxation in 2024, thereby, lowering the required tax levy. The primary risk with this option is that if the Municipality requires similar taxation revenues in 2025, and there is a smaller or no surplus from 2023 (or it is allocated to other purposes), then the required revenues from taxation in 2025 could be higher than in 2024, thereby requiring a higher tax levy.”