Collingwood’s Finances: Great Shape!

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Doom and gloom consultants

There’s been a lot of doom-and-gloom bandied about over Collingwood’s alleged dire financial picture this term. There have been the-sky-is-falling presentations and nightmare-inducing consultants’ reports that paint a bleak picture of the town’s debt and financial status. Hand-wringing and hair-pulling.

These jeremiads are enough to make a taxpayer wake up in the middle of the night and weep. If it were true.

Fortunately, it isn’t. I’d like to think that someone got his or her numbers wrong, read someone else’s information, added or subtracted when they should have been doing the opposite. Or maybe was just pulling our collective legs. A practical joke. Whatever the reason, it’s not true (and I sincerely hope someone didn’t do it deliberately!).

How do I know we’re in great shape? From reading an impeccable source for financial information: the province of Ontario’s own multi-year fiscal analysis, about which the province’s website explains….

The Multi-Year FIR Review (2009 On) – By Municipality provides selected FIR information by municipality for the years 2009 and greater.
In 2009, the Public Sector Accounting Board introduced new accounting and reporting standards which required municipalities to adopt full accrual accounting practices. As a result of these changes, municipalities must now account for and report their tangible capital assets in their Statement of Financial Position. The FIR also adopted these new reporting standards effective 2009…

The data runs from 2009 to 2014 for more than 500 municipalities, each one a separate file. It doesn’t encompass the previous year (2015), during which our council laboured under what seems to be false information about our debt and finances.

But you will be pleasantly surprised, I trust, to learn Collingwood is actually pretty well off in almost every category and performance indicator. Sure, we can always do better, but you won’t find any doom and gloom in this. So take heart and relax.

Collingwood’s report is number 4331 on the list. Download the spreadsheet and gaze in awe at the numbers. The first thing that should strike you is that, despite all that negativity and brouhaha from consultants and administration staff, the town is actually in great shape, financially.

First, let’s look at the town’s actual debt. The province records the debt as follows:

  • 2009: 28,010,232
  • 2010: 45,507,356
  • 2011: 41,681,932
  • 2012: 37,962,357
  • 2013: 36,860,776
  • 2014: 37,022,620

From 2010, when the previous council took office to 2014, when it left, the debt was reduced more than $8 million. Those are the provincial numbers, not some made-up figure with phony “internal debt” figures tossed in like nuts into a salad.

(I should say “told you so” here, but just imagine I say it pretty much at every point hereafter, and it will save me some typing, and you some reading – but you can say thank you to the previous council for its sound financial management policies….).

But wait, it gets better. Much better! Here’s the municipal debt burden per household followed by per capita. Notice how it fell steadily last term:

  • 2009: $2,849 / $1,600
  • 2010: $4,545 / $2,600
  • 2011: $3,897 / $2,166
  • 2012: $3,529 / $1,973
  • 2013: $3,378 / $1,916
  • 2014: $3,291 / $1,850

Let’s look at the capital assets for the same period. Here are the figures for the town’s assets followed by the equity remaining in those assets:

  • 2009: 161,526,123 / 111,878,861
  • 2010: 177,341,517 / 126,016,418
  • 2011: 184,708,164 / 134,223,487
  • 2012: 197,428,168 / 140,179,984
  • 2013: 193,594,826 / 147,274,306
  • 2014: 194,564,701 / 152,010,070

Our capital assets grew by $17 million last term, and the equity grew by $26 million. In the meantime, we accumulated solid reserves:

  • 2009: 15,750,399
  • 2010: 19,298,486
  • 2011: 24,232,307
  • 2012: 40,044,730
  • 2013: 32,503,244
  • 2014: 31,738,485

The jump in 2012 was from our sale in 50% of Collus to Powerstream (which was placed in reserves at the time) followed by committing a portion of it later, after public consultation, to building our beautiful new recreational facilities and rebuilding Hume Street. A small drop in 2014 was, I believe, to offset some operational costs (to keep taxes low) and invest in the new fire station (a capital asset).

Last term, we claimed to have kept tax rates low. Here’s what was actually levied during that period:

  • 2009: 42,256,094
  • 2010: 46,119,286
  • 2011: 46,234,436
  • 2012: 47,092,294
  • 2013: 48,770,136
  • 2014: 50,974,384

The tax levy for 2010 was, of course, set by the council of 2006-10. As you can see, only the last year has any increase of note. However, that was in part created by the growth during that time. Here is the value of all building permits during that time, followed by the total number of permits issued (residential and non-residential):

  • 2009: 58,764,575 / 434
  • 2010: 41,008,416 / 242
  • 2011: 64,102,270 / 463
  • 2012: 59,467,958 / 281
  • 2013: 54,500,867 / 248
  • 2014: 72,454,242 / 435

Here’s the cash surplus the town has on hand at the end of each year, It’s a tidy sum:

  • 2009:  1,254,566
  • 2010: 14,193,703
  • 2011: 15,795,389
  • 2012: 18,391,864
  • 2013: 19,112,516
  • 2014: 26,098,984

The last year, 2014, the cash surplus represented 59% of the town’s total liabilities. Looked at another way, the town’s real debt at the end of 2014 was 41% of $37,022,620, or $15,179,274.

I could do this all day. But I’ll let you read the numbers yourself later. I’ll skip to the performance indicators. These are the keys that underscore just how fiscally healthy Collingwood was at the end of 2014. First the operating surplus ratio. This is described as:

…an indicator of the extent to which revenues raised cover operational expenses only or are available for capital funding or other purposes. A negative ratio indicates the percentage increase in rates revenue that would have been required to achieve a break even result. The basic target: 1% to 15%. Advanced target: > 15%.

The target, the province indicates, is 0 to 15%. Here’s ours:

  • 2009: 28.3%
  • 2010: 44.3%
  • 2011: 33.4%
  • 2012: 34.4%
  • 2013: -6.3%
  • 2014: 12.5%

So we’re well within the province’s target range, despite tax freezes (which you cannot maintain indefinitely, sad to say, as we see in the jump indicated in 2014).

Next is the…

CURRENT RATIO is an approximate measure of a municipality’s “liquidity” or its ability to pay short-term obligations.Basic target: 40% to 60%. Intermediate target: 60% to 90%. Advanced target: > 90%.

  • 2009: 88.4%
  • 2010: 90.0%
  • 2011: 90.0%
  • 2012: 88.5%
  • 2013: 90.1%
  • 2014: 87.5%

And then the ratio of liability to assets, the current ratio. The target is 1:1 (liability to asset).

CURRENT RATIO is an approximate measure of a municipality’s “liquidity” or its ability to pay short-term obligations.

  • 2009: 1 : 1.74
  • 2010: 1 : 3.21
  • 2011: 1 : 3.90
  • 2012: 1 : 4.71
  • 2013: 1 : 5.21
  • 2014: 1 : 5.09

So we’re well ahead of that curve. This is followed by our

DEBT SERVICE COVERAGE RATIO is a measure of a municipality’s ability to service its debt payments. The target is a ratio greater than or equal to 2.

  • 2009: 2
  • 2010: 7
  • 2011: 4
  • 2012: 4
  • 2013: 1
  • 2014: 3

Next:

ASSET SUSTAINABILITY RATIO (expressed as a percentage) is an approximation of the extent to which a municipality is replacing, renewing or acquiring new assets as the existing infrastructure being managed by the municipality are reaching the end of their useful lives. The target ratio is > 90% per year. A municipality which is not reaching this target is not sufficiently maintaining, replacing or renewing their existing infrastructure. This may result in a reduction in service levels and/or useful lives previously expected and will likely create a burden on future ratepayers.

  • 2009: 184.2%
  • 2010: 538.9%
  • 2011: 229.4%
  • 2012: 171.7%
  • 2013: 277.5%
  • 2014: 115.8%

And finally,

ASSET CONSUMPTION RATIO (expressed as a percentage) measures the age of a municipality’s physical assets. It measures the extent to which depreciable assets have been consumed by comparing the amount of the assets that have been used up and their cost. RATIO: ( < 25% – Relatively NEW infrastructure, 26% to 50% – Moderately NEW infrastructure, 51% to 75% – Moderately OLD infrastructure, >75% – OLD infrastructure)

  • 2009: 37.9%
  • 2010: 34.2%
  • 2011: 33.4%
  • 2012: 34.5%
  • 2013: 35.3%
  • 2014: 36.8%

Let me reiterate what I said earlier: these are the province’s numbers. They aren’t from some buddy consultant paid to provide answers that fit an ideology or agenda. They aren’t pulled out of a hat like some troglodytic bloggers are wont to do. They are solid. Real.

So the next time you hear someone spouting doom-and-gloom about Collingwood’s financial situation, dismiss them with a wave your hand and a raspberry. We’re in fine shape. You’re welcome.

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