Lantzville council passed the third reading of its 2025 budget, beginning the process to build back up the municipality's reserves which remain well under optimal targets.
More budget discussions were held at a regular meeting of council Wednesday, March 26, following a budgeting process that had included an online survey asking residents if they supported a property tax increase. The preliminary budget includes a three-per cent tax hike.
"I'm very pleased with how this turned out in the end, I think we reached a place where we have been able to provide for very stable spending, large amounts of contributions for reserves, capital projects and also the modest tax increase of three-per cent in addition to the extra income from new builds," said Coun. Jonathan Lerner.
Every one-per cent tax increase equates to about $31,000 of additional revenue for the district annually. Any increase would go toward putting money into reserves for future infrastructure replacement.
Major capital expenditures in the plan for 2025 include $600,000 for water main replacements on Millard Drive, Lynn Drive and Lantzville Road, $215,000 for a culvert repair on Rumming Road, $282,000 for a Dickinson Road culvert replacement, $500,000 for road work on Phantom Road, and $181,000 for a semi-rural trail along Lantzville Road west of Huddlestone Park.
The district will also put $100,000 toward an asset management plan to help determine the amount of money it should be setting aside in reserves to replace and rehabilitate aging infrastructure and assets.
A draft budget report earlier this year from Ken Bjorgaard, interim director of financial services, noted that the municipality's reserve balances are not at the optimal levels at the time of enacting the budget, "however, the district is committed to transitioning towards its optimal targets."
"The optimal balances ensure that the district’s guiding principles are achieved and that the respective balances do not grow beyond their intended purpose(s), creating idle assets that could be otherwise utilized for other corporate priorities," the report notes.
In that draft report, the district is projected to end 2025 with approximately $7 million in the general reserve fund, about $66,000 in the statutory reserve fund and $2 million in the unrestricted and restricted accumulated surplus. Development cost charges were anticipated to be $1.8 million.
While the "optimal levels" are preliminary, the report notes, and will be updated based on the asset management results, the projected amounts in reserves at the end of 2025 are below the optimal rate. As an example, within the general reserve fund there is the financial stabilization reserve, which is projected to be about $158,000 at the end of 2025, while optimal levels would be $226,000. The general capital reserves, another part of the general reserve fund, is recommended at $5 million, but is projected to only be at $1.46 million at the end of the year.
At the same time, every reserve marked in the report remains above the "minimum level," which serves to "ensure that the respective reserves are not depleted to the point where those balances are no longer able to serve their intended purpose(s)." For the financial stabilization reserve, the estimated minimum level to serve its purpose is $113,000.
During the meeting, Coun. Ian Savage said "achieving these [optimal] balances is highly unlikely and unrealistic."
"The total is [$17 million] more than our current balances in these nine particular reserves I'm talking about," he said. "Sometime in the future we should be setting targets for minimum reserve contributions – that's how much we fund each one every year. That, to me, I feel would be more relevant than trying to achieve this $17 million more in balances."
He added that the district will still have $43,000 from new development property taxes yet unassigned, and he hopes a good portion, if not all, can go toward infrastructure reserves.
Mayor Mark Swain said it will take a "long time to build reserves" to the optimal targets.
"We will have to get maybe a bit creative in certain levels to try to achieve it, but it will be a big undertaking to build those reserves … because we have certain infrastructure obligations we're expected to meet."
Third reading of the financial plan bylaw passed unanimously.
