City's revenue streams proving challenging for Budget planning

When it comes to revenue sources towards civic requirements, the City of Prince Rupert is for the most part benefiting from Senior levels of government, with grant funding and direct financial investment making for a good portion of the capital that they have to work with as they put forward the. 2024 Budget for consideration of the public.

As part of her financial review of Monday, CFO Corinne Bomben provided for a chart that traces the money coming in to the city's coffers. 

The revenue stream from Government transfer listed as 46 percent accounting for close to half of the money that the city puts to use. 

That significant amount was followed up by external borrowing at 22 percent and General Taxation which accounts for 19 precent.

Fees and Charges brought in 9 percent while Dividend from Prince Rupert Legacy and other revenue accounted for 2 percent each.

The overview of the city's financial report for the budget began with City Manager Robert Buchan who observed as to the current state of the city's financial picture. 

First paying tribute to the work of the city's financial staff and the amount of cuts that they had to make to get the budget to the level that was pretend on Monday night.

"There's many important things and good things that we like to do for the community for service, but we are in still a difficult financial position, though I'm happy to say, better than last year in terms of the budget proposal" -- City Manager Rob Buchan

On incoming revenues, the City Manager made note of CityWest and the contribution that it makes to the city's financial position, though as he observed on Monday,  that is basically just a loan repayment on the still significant amount owed in repayment from the days of change from city department to stand alone company.

"We have a $500,000 contribution from CityWest this year, that's been loosely described as a dividend in past years. It's not a dividend it's repayment of equity that the City  put in initially when CityWest was transferred out as a separate company.

So that's basically repayment of equity over time and there's some flexibility in how that is paid.

We try not to put that into Operations but hat's been a challenge.

That flexibility as Mr. Buchan described it, is something that has ranged from returns to the city of up to 2 million dollars a number of years ago, to the sliding scale that delivered  the $500,000 noted for this year.

The days of big numbers on novelty cheques seems in the past
as CityWest's repayment of an outstanding loan provides for
lower returns in recent years 

City Council has not appeared to have had much interest in hearing from CityWest, as to why they haven't been able to provide more towards their still significant outstanding debt.  

The City owned communication company has gone through a few Presidents over the last few years since the last time Council invited anyone from the CityWest down to City Hall for a public update.

Mr. Buchan also spoke of Legacy, the fund that came into creation in the latter months of the Jack Mussallem administration in 2014. 

The seed money for the financial instrument was money from Exxon/Essso related to the heady days of LNG talk in the community and their tire kicking of Lot 444 across fro Seal Cove.

Exxon called an end to their plans in 2018, City Council has made use of the Legacy funds for a range of initiatives and some budget tweaks along the way.

On Monday evening Mr. Buchan observed how some of that fund was used for the 2024 budget

"Legacy our Municipally controlled corporation is contributing 2.122 million dollars in dividends this year, and that's helped significantly in keeping taxes and utility fees down"

Ms. Bomben followed up on some of the Legacy notes, observing as to how the city's finance office approaches the use of funds from Legacy.

"Prince Rupert Legacy is providing dividends to offset a signficant amount of the coast in projects that would either be funded through taxes or utility fee increases.

Dividends from Legacy are not utilized to offset Property tax, or utility increases that are driven by normal operating costs. 

The reason for this can be seen on the following slide"

"This is an example where using dividends to offszet taxes in a year results in a heavy penalty in the subsequent year. 

Should a situation arise where funds can't be provided through dividends on a continuous basis, the taxpayers in a subsequent year, will have a spike in taxes, they essentially have to fund two years of inflation in one year. 

This is why it's best to fund one time capital or special project items through dividends and why staff do not recommend offsetting inflationary operating increase through dividends"

While Council members often hail the use of the Legacy Fund and remark as to how fortunate they are to have it. The sharing of information on how they make use of it has been spotty, leaving the financial instrument details to the back pages of civic financial statements.

What likely would be more use for residents, would be for Council to provide for a full overview as to how it works, how it directs revenue and dividends from it and then explain how they decide how to spend the Legacy Money. 

Something that might help taxpayers decide if their elected officials are making the best use of the fund.

Included in the documentation from the Financial review was a chart towards the Five Year Financial plan that highlights the revenue streams that the city makes use of.

Of note from the review,  is the rather lacklustre progress for Watson Island which does not appear to forecast any significant increases in revenues for the next five years.

With the City's swimming pool and marina currently bringing in more revenue it would seem than, their industrial footprint on the city's border with Port Edward.

Other than the  announcement of  the Pembina plans in 2017, any further advances for the industrial site have not made for much in the way of discussion for City Council, with the city not even publishing a roster as to who is currently listed as the tenants at the industrial site.

As for Pembina, the primary tenant at Watson Island announced a shift in its focus in 2022, putting original expansion plans on the shelf, with the Alberta company taking on a more active role in its Kitimat footprint.

Considering how plans for other high profile terminal projects are now underway for both the Metlakatla First Nation and Prince Rupert Port Authority, the competition for customers for the Watson facility may soon be quite keen. 

And so far, the often touted promise of Watson Island still seems off on a horizon and below the expectations shared in years previous.

What's really required from City Council members through the year and not just at Budget time, is to be more engaged in oversight on the CityWest debt repayment, the progress for Watson Island as an economic engine for the community and how they are handling the Legacy Fund instrument.

Council members should remember that they serve as the advocates for the voters that put then in office.

Making sure that the community is getting the best values from their financial resources and receive consistent information towards them, should be a key element of their work on our behalf.

The Revenues review made for the start of Monday's Budget Session presentation which you can review from their video below.

Tonight marks the first of two public consultation sessions, the opening round set for Coast Mountain College and their Multi-Purpose Room that begins at 7 PM.

Next Tuesday, brings the second and last public comment period, that taking place at the City Council Chambers starting at 7PM.

More notes related to the Budget process for 2024 can be reviewed from our archive page.