Town financial report highlights impacts of pandemic

By Sean Feagan, Local Journalism Initiative Reporter

For the Town of Strathmore, the COVID-19 pandemic has changed both sides of its balance sheet.

A draft financial update for the first half of the year was presented to council during its regular meeting on Sept. 16. The town’s consolidated financial position up to June 30, 2020 was presented and compared to its position as of Dec. 31, 2019, by Lisa Gregory, finance manager for the Town of Strathmore.

The total of cash, temporary investments and investments was $20.8 million as of June 30, which was higher than at Dec. 31, 2019, when the amount was $19.7 million.

“We received our tax payment to the end of June, which bumped up our cash,” said Gregory. “We expect this balance to decrease throughout the year as we pay our operating and capital expenditures.”

The town received $5.1 million from the provincial Municipal Sustainability Initiative (MSI) grant and the federal Gas Tax Fund (GTF) as of Sept. 15, which was not reflected on the balance sheet as presented.

Taxes and grants in place of taxes receivable was higher in June (about $3.1 million) than in Dec. 2019 (about $591,000).

“We are currently estimating that we are behind about $3 million in collections compared to June of 2019,” said Gregory. This is because in response to the COVID-19 pandemic, the town council voted to extend the tax payment deadline, typically June 30, to Oct. 31.

But now, more taxes are being received. “We have noticed that our (Tax Installment Payment Plan) payments subsequent to the statement in the third quarter are almost at normal levels – so that’s a good sign,” she said.

Trade and other accounts receivables, at about $2.8 million, is up from the balance of about $2 million at Dec. 31, 2019. The utility accounts receivable increased by $231,000 because of the town’s utility payment deferral, with the remaining balances from grant receivables, GST and other components.

The town’s total financial assets are about $26.7 million, compared to about $22.3 million at Dec. 31, 2019. Total liabilities have increased to about $33.4 million, compared to about $26.3 million at the end of last year.

Accounts payable have decreased by about $1.1 million, from about $4.8 million at Dec. 31, 2019, to about $3.7 million at June 30.

Deferred revenue increased by about $3.1 million from the end of last year, representing the amount of taxes collected for the future period of July to December. 

“When you pay your taxes at the end of June, you’ve paid for your first part of the year, and then we have money in deferred revenue for the second part of the year,” said Gregory.

The town’s long-term debt increased from about $19 million at Dec. 31, 2019 to about $23.9 million, representing an increase in funding for the utility bylaw completed in the first quarter of 2020, the additional town hall borrow and the emergency operating borrow, she said. For this latter borrow, $1.5 million of $3 million total was borrowed in September, and therefore not included in the balance sheet.

The town is at 56 per cent of its estimated debt limit (based on 2019 figures). “Currently we are over our designated 50 per cent threshold, and this is due to funding utilities and our emergency spending,” said Gregory.

Regarding the town’s consolidated statement of operations, the operating revenue was about $14.9 million, or 49 per cent of total budgeted revenue. This value is five per cent higher than the same period in 2019, due to increases in taxes, user fees and other revenue, she said.

Total expenses are about $16.3 million, representing 48 per cent of the budget, compared to about $17 million or 50 per cent of the budget for last year. Expenses are down mainly because of decreased spending due to temporary layoffs and closure of recreational facilities. The total budgeted salaries and benefits of about $13.2 million is 31 per cent of the town’s budget of $43 million.

The town’s reserve decreased from about $9.3 million at Dec. 31, 2019 to $8.9 million during the first half of 2020.

The full draft financial report can be found in the Town of Strathmore Sept. 16 regular meeting of council agenda package, available on the town’s website.