BANFF – The Town of Banff is in the black to the tune of $802,000.
The 2021 year-ending financial statements, which were presented to council on Monday (April 11), show an $802,000 undedicated surplus, in large part due to a significant jump in building and development permits.
Based on a recommendation from administration, council unanimously decided to put the entire unrestricted surplus into the budget stabilization reserve, which now has an unrestricted balance of $1.3 million.
“Because this year is special due to the COVID pandemic and with ongoing international matters, we would recommend to actually allocate the full unrestricted surplus to budget stabilization,” said Dorothee Esquerre, the Town of Banff’s finance officer.
Based on the current financial plan, the target balance for the budget stabilization reserve is two per cent of current year budgeted expenditures net of amortization. The financial plan, however, does not provide specific guidance for surpluses exceeding what is required to be directed to this reserve.
Under the financial plan, unrestricted budget surpluses from prior year operating results are retained and used in the following years to stabilize the annual tax increase and provide funding for one-time expenditures.
Historically, council has chosen to transfer any surpluses to capital reserves to fund deficits or more recently to the budget stabilization reserve based on economic uncertainty driven by the COVID-19 pandemic.
Councillor Hugh Pettigrew voiced strong support for directing all of the $802,000 surplus to the budget stabilization reserve.
“When we have surpluses that are significant, and I would call this significant, some municipalities, some regions will say ‘you over-taxed us; look at all this money coming back to us’, but I don’t say I agree with that,” he said.
“I say it’s a good thing it’s coming back. We’re faced with some challenges and I think the right place to put it is in stabilization and hopefully be used to reduce the budget impact this year if we need it.”
Councillor Chip Olver also supported the move.
“One of my reasons, is I think when we next look at our financial plan, is we should revisit our target for this fund,” she said.
“The previous thinking around how we established this target no longer applies and that our target is actually too low for current circumstances in our community, our country and the world.”
The planning and development department contributed a significant chunk to the surplus with increased revenues from building and development permits. Building permits revenue totalled $710,654, which was $336,000 greater than budget, while development permit revenue was $206,400, which was $106,000 greater than initially budgeted for 2021.
Chris Hughes, the director of corporate services, said this revenue line is very difficult to predict because the planning and development department can never be certain when an application is going to come in.
In addition, he said permit revenues were strong throughout the pandemic, which indicated the business community’s long-term confidence in reinvestment.
“There are a lot of properties that took advantage of slower tourism to do some redevelopment,” he said.
Although there was an unrestricted surplus of $802,000, there were also several offsetting variances that contributed to the final financial results.
Of note, there was a decrease in business licence revenue from budget of $918,000, which is fully offset by a decrease in contracted services, and there was a $5.5 million increase in capital government grants fully offset by capital reserve transfers.
In addition, there was a decrease in wages/benefits/overtime of $476,000 from budget, which represents a Town-wide total wage/benefit/overtime savings of $726,000 less the budgeted target savings of $250,000.