Where is the 2% Reserve Fund for Rural Projects?
In 2011, area rating was changed from 34% to 32%. Council led the Rural Ratepayers to believe that, 2% would be put in a reserve fund for upcoming rural projects.
In 2014, I noticed that it didn’t show up in the Town’s audited financial statements for 2011, 2012 and 2013.
Here’s my exchange with Town Treasurer, Mark Day in September 2014.
Sep 22, 2014
On May 10, 2011, by resolution 211/11, council resolved:
THAT 2% of the approved rural tax levy be placed in a reserve fund designated to be used specifically for upcoming rural projects…
As usual, the resolution was confirmed by by-law at the next regular council meeting.
I had been told that this reserve fund was set up and now contains about $2-million. However, I have reviewed the audited financial statements for 2013 and I am unable to find any reference to this reserve fund, either in Schedule 2 (consolidated schedule of continuity of reserves and reserve funds) or elsewhere.
This is causing some confusion and I would appreciate it if you could advise:
Was a reserve fund ever set up for upcoming ruralprojects.
If so, does it still exist?
3, If not, what happened to it?
If it was set up and still existed as of December 31, 2013, where does it appear in the audited financial statements (either as a separate item or included in some another item) and what is the approximate balance in this reserve fund?
Thank you for your anticipated help in clearing
245 John St.,
Sep 23, 2014
The 2% increase in the rural tax levy generates an additional $97,458 for municipal purposes. Since 2011 this amount has been transferred to our Capital fund and has been allocated to go towards the South Shore road project. This project was a Build Canada Fund project in partnership with the Federal and Provincial governments. Our portion of the project total was $1,735,426 (which still requires to be financed)
The total of $292,374 (3 years at $97,458) is included in our Unrestricted Surplus balance of $2,847,911 which for your reference is in Note 11, page 17 of our 2013 Consolidated Financial Statements.
The Town of Greater Napanee
Mark Day, CPA, CMA
Director of Finance/Treasurer
Phone (613) 354-3351 Ext.2005
Fax (613) 354-6545
At the meeing on Tax Policy at SPC on June 29, the Treasurer admitted that the reserve fund had not be set up and the 2% was just dumped into the unrestricted surplus account with all the other general tax revenue. He repeated the claim that $400,000 was “allocated” for rural projects but this number exists only in his head. There’s no ledger in the Town’s bookkeeping system for the rural reserve fund and it’s not tracked in the accounting system. There’s no restriction on what it can be spent on. It’s just mingled with the other general funds in the unrestricted surplus account. The reason I’m confident in saying this is that his number $292,374 is just 3 years at $97,458. The figure $97,458 is for one particular year and that number would vary from year to year. Thus his number $292,374 is just a “back of the envelope” calculation and not based on any reserve set aside in the accounting system.
At the meeting he claimed that this money was intended to be used for rural projects. But without setting up the reserve fund there is no restriction on how this council or a future council could spend the money. The allocation is at most a statement of his present intent.