“Really, the plan to replenish the general fund reserve should have started to be worked through last fall,” said Mayor Sandra Masters.
Article content
City administration is asking council to consider commissioning a long-term plan to nurse Regina’s major emergency reserves back to health.
The request comes after city council recently approved an additional $11.7 million in spending from the general reserve fund, which will deplete its balance to a low of $7.1 million by the end of 2024.
Article content
The minimum recommended balance for the reserve is $23 million.
Advertisement 2
Article content
Last week, director of financial strategy Barry Lacey warned city council that a discussion about how to top up those reserves must be had during the next budget cycle at the latest.
“Whether you pay it out of your left pocket or your right pocket, out of one reserve or several reserves, we’re going to have to have a conversation about a long-term strategy for how to replenish them,” he said.
At its May 22 meeting, council agreed to cover a $2.7-million deficit from 2023, plus a $232,000 payment owed to REAL for catalyst committee work, out of the general reserve fund.
The Cities Act requires municipalities to deliver balanced budgets, leaving little wiggle room, according to administration.
Later that same meeting, council also agreed to use the general reserve to pay $9 million owed to the Canada Revenue Agency by Economic Development Regina and Regina Exhibition Association Limited after an audit resulted in a clawback of pandemic wage subsidies.
The city’s audit and finance committee recommended softening the blow by transferring over $8 million in surplus from the fleet replacement reserve to the general reserve, which council approved.
Headline News
Article content
Advertisement 3
Article content
“We might have 10 more expenses before budget time,” Coun. Jason Mancinelli (Ward 9) said when asked for the rationale behind the idea.
The fleet reserve was $11 million above its maximum balance — a buffer now reduced to $3 million. Had council not approved the transfer, Lacey said the general reserve’s uncommitted balance would’ve fallen even lower, to just $6.9 million.
“We can go over that in just one snow budget, let alone anything else that comes up,” responded Mayor Sandra Masters.
A report on the state of the city’s reserves says only six of 23 reserves are currently in a surplus position. It notes the utility operating fund is also at a surplus.
The general fund and asset revitalization reserve (ARR) are among those with low balances, both meant to serve as rainy day funds for unbudgeted or emergency expenditures.
Both have been “at or near their recommended minimums for a couple of years,” said the report, with “no guaranteed source of funding to bring them back within their recommended funding ranges.”
Annual investment into the ARR had been $5.4 million a year since 2014, but has been zero since 2021. Input into the general reserve was around the same but, since it’s replenished by operating surpluses, the fund has also seen zero investment due to back-to-back deficits in 2022 and 2023.
Advertisement 4
Article content
By the end of 2023, the two respectively had $700,000 and $15.3 million left available to spend.
The fleet reserve is also projected to be in the red by 2027 due to spending plans, including commitments to deliver new electric city buses in 2025 and beyond.
Up for approval at city council’s next meeting is a request to bring back a long-term plan for 2025’s budget, and to change how it reports on reserves and capital projects as well as how it structures quarterly financial reports.
“Part of the intent is to engage council more than we have in the past with respect to budget pressures and council’s spending priorities,” Lacey said last week.
Masters has also put forward a motion to alter the policy on reserve management to direct any surplus funds straight to the general reserve fund first.
“Really, the plan to replenish the general fund reserve should have started to be worked through last fall,” Masters said after council’s last meeting.
“That general fund reserve is a pretty crucial one. It doesn’t matter if it’s snow or other types of emergencies — sinkholes or winds, a piece of infrastructure fails — that money on an emergency basis needs to come from somewhere.”
Advertisement 5
Article content
Administration has also suggested transferring any extra investment revenue accrued this year into the general reserve and ARR. It requires city council approval and is slated to be discussed at the next meeting on June 12.
The audit and finance committee has cautioned that doing so may mean a necessary mill rate increase of at least 2.3 per cent for 2025 to offset the change and keep the budget balanced.
Recommended from Editorial
The Regina Leader-Post has created an Afternoon Headlines newsletter that can be delivered daily to your inbox so you are up to date with the most vital news of the day. Click here to subscribe.
With some online platforms blocking access to the journalism upon which you depend, our website is your destination for up-to-the-minute news, so make sure to bookmark leaderpost.com and sign up for our newsletters so we can keep you informed. Click here to subscribe.
Article content
