Auditor flags Haliburton County’s low reserves
|By Mark Arike - Staff Writer | May 10, 2018
The County of Haliburton’s new auditor, KPMG, has determined the upper-tier municipality’s reserve balances are low.
“Your reserve and reserve fund balances, if you do the accounting, basically are zero,” said Oscar Poloni, the company’s office managing partner, during a presentation to council on April 25. “So, from our perspective, that’s something we wanted to bring to your attention.”
Poloni stressed that KPMG isn’t in a place to dictate policy. But he suggested the municipality consider a multiyear plan, such as a phased-in tax increase, to put away funds for unexpected future expenses. Poloni said taxes are fairly low in the county compared to neighbouring municipalities.
“At the end of the day, long-term sustainability is something you may want to look at,” he said, referring to an increase. According to the year-end audit report, “low reserve levels are indicative of limited capacity to deal with cost increases or revenue losses, requiring the county to revert to taxation or user fee increases or the issuance of debt.”
The county’s reserves decreased by $1.8 million between 2011 and 2017, from about $4.3 million to $2.5 million. This year, about $918,000 went into reserves, with the majority set aside for specific projects related to sustainability, said treasurer Elaine Taylor. Since the county usually assigns money from reserves to specific projects, it “may not necessarily be able to fund incremental costs or revenue losses,” states Poloni’s report. He also pointed out the replenishment of capital infrastructure, such as roads and bridges, “is falling behind what we could consider to be your replacement requirements.”
“While you’re reinvesting in capital, you’re actually not keeping pace,” he said, adding that will lead to deterioration of assets.
In an email, Taylor explained that aging roads and bridges cannot be replaced at their original cost, yet they are amortized at that amount.
“It is this increase in expected cost to replace which give us our infrastructure gap,” she said.
Councillors appreciated the feedback from Poloni. “I think this kind of reporting makes us better, it makes us wiser,” said Coun. Brent Devolin. Poloni said it was a pleasure to work with the county’s staff and that no problems were encountered during the audit. Council unanimously approved the audited statements.
MARK ARIKE is a reporter for The Highlander.