Unprecedented growth sparks city's multi-million dollar surplus

The majority of the surplus for the city for 2023 (fourth quarter) is due to what city officials described as 'unprecedented growth the city continues to see .'

Stephanie Mitchell with the Budget and Financial Planning department stated that the preliminary surplus is $3 million, or 1.6 per cent of the 2023 council amended budget at year-end. The surplus the city saw was slightly higher than the originally predicted $2.75 million. 

Mitchell presented to city council a preliminary update on the finances of the city for the fourth quarter of 2023 on Monday, as well as recommendations for moving money into both the General Operating Reserve and General Capital Reserve. 

"The 2023 results show that we brought in $5 million of revenue beyond what was budgeted. Airdrie continues to be one of the fastest-growing cities in Alberta. With this growth, the city saw increased supplementary tax revenues, increased revenue from utility billings, and new water meter sales."

She added that there continues to also be very high demand for community services, including passes and admission revenues from Genesis Place, as well as a high ridership with the City's transit system.

"2023 also saw extraordinary permit revenues due to an increased number of new builds and a combination of larger projects occurring in the city. Lastly, contributing to the increased revenues is almost $800,000 in grants from the MSI [Municipal Sustainability Initiative] operating top-up and new operating grant opportunities the city has been approved for in 2023. Expenses came in $2 million over budget at year-end."

City documents show a detailed break-down of preliminary financial 2023 (Q4) results for the city (Graphic Credit to City of Airdrie)

Mitchell underlined though that expenses came in $2 million over budget at year-end.

"The underutilized variance seen within salaries wages and benefits is mainly related to vacancies and timing of hiring offset by WCB [Woker's Compensation Board] premium increases. The contracted and general line saw an overall trend of projects that have been delayed across multiple departments and or long lead times procuring items. These projects have been carried forward to 2024, which contribute to the audit to reserves over budget lines."

The original capital budget was approved at $67.8 million the prior year, carry forward amounted to $127 million and with an additional $264,000 in budget amendments, she added.

"The total adjusted capital budget for 2023 was $195.1 million. Actual funds spent were $57.9 million as of December 31."

She said that of the remaining $137.2 million approved capital budget $124.6 million will be carried forward to 2024.

"Major capital projects make up the majority of this carry forward amount and include projects such as the 40th Avenue Interchange, the Multi-Use Facility and Library and the Curling Club Lifecycle Project."

The balance in reserves at the end of 2023 was at $206.8 million, of this total, $71.4 million is externally restricted in nature, leaving $135.4 million in funds available for use at council's discretion.

Council was then asked to transfer over $800,000 of the operating surplus to the General Operating Reserve; which would be drawn on this year, to cover on-time expenditures, while over $2 million was requested to be placed in the General Capital Reserve. 

"This would leave the General Operating Reserve just short of the minimum level outlined in the council-endorsed fiscal sustainability framework, which states the general operating reserve will maintain a minimum level of three months or 25 per cent of the approved annual general tax-supported budget. At year-end, the reserve balance covers 23.7 per cent rather than the 25 per cent recommended," she said.

Councillors Tina Petrow and Ron Chapman expressed some concerns about not hitting the 25 per cent benchmark, although Deputy Mayor Al Jones added that tax revenue should be able to minimize the gap.

"Taxes are constantly coming in; I'm not concerned there at all. This gets us closer; it's still not where we need to be with Capital Reserves, but it moves us closer," he remarked.

Airdrie Mayor Peter Brown added that there is over $23 million in tax stabilization money, which he said is a 'backstop'

"That's over and above what we currently have; we just borrowed [money]. To me, there's no question that we need more money in our Capital Grant to be sustainable over time. I wouldn't support anything other than what's being reflected and recommended on the table."

Council agreed to city staff recommendations. City documents concluded that city auditors began the 2023 financial audit on February 26, with results expected in early April.

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