Sunday, October 20, 2013

2013 Election Update

Today marks the day before the election and thanks to technology and social media the coverage of the candidates and issues has been absolutely outstanding.  It helps that there are a few people in the community making sure that people get informed.

Daryl White has a website www.gpvoters.ca that posts a fairly comprehensive set of impartial election information.

David Biltek has been blogging continuously as the election progresses with an astounding level of detail that can only be obtained through research and interviews with sources in the know.  You can following his information at davidbiltek.wordpress.com.

Fred Rinne and myself will be covering the results of the 2013 election on the evening of Oct. 21st.  You can watch the live webcast starting at 7:45pm by using this link: http://www.cityofgp.com/index.aspx?page=1855.  We'll be presenting some background information along the way and sincerely hope that you'll enjoy it.

MY RESPONSE ON FINANCIAL RESERVES
At the risk of getting too involved, I felt I had to respond to the latest information released by the Gladys Blackmore campaign.  I have to provide a disclaimer that I am in support of Bill Given for Mayor for many reasons.  He has proven himself to be a strong leader who is engaged, good with the public and has a strong vision for the City.  At the very least, I feel he deserves another term to more fully realize his vision for Grande Prairie.  I also feel that Gladys would be a competent leader for the City, however, I'm not a big fan of the negative approach to politics.  Between the two candidates, I believe Bill Given to be the better of the choices and Monday night, we'll see what the public thinks.

The latest accusation from Gladys Blackmore is the insinuation of a misuse of financial reserves.  Not only is the information inaccurate and misleading, but the statement is suggesting that reserves should be used to lower taxes.  A short version of the statement is available on her website at www.gladysblackmore.com/news-blog/the-facts.  A more detailed email went out in the form of an email to members of the public.  The part of the statement being touted as fact says that:

"As a result, the city realized a NET PROFIT of over $30 million in EACH of 2011 and 2012. This money, almost $65 million, is sitting in reserves. Shouldn’t it be invested in infrastructure and economic development instead?"

Bill Given has already responded to the statement in his blog urging the public to not get misled:  bill-given.blogspot.ca/2013/10/you-dont-deserve-to-be-misled-city.html.  His blog describes what the reserves are used for and why it's important they be in place.

David Biltek provides a response of his own against Blackmore's statement: davidbiltek.wordpress.com/2013/10/20/thems-fightin-words-plus-final-statements-from-candidates/.

As a member of Council for a few more days, I can tell you that we go over financial reports on a periodic basis and the ability of council members to fully understand them varies from one to the next, which is why it's important to choose your council carefully.  The job isn't just a role where you get to vote yes or no on projects.

The $30 million and almost $35 million of "net profit" which is being referred to is the same pot.  It's a cumulative total not two amounts that should be added together.  So there is no $65 million in surplus.  The $30 million has been accumulated over decades and fluctuates from year to year.  The growth in the amount from 2011 to 2012 comes from 2 things:  the principle to always put a little away in the financial stabilization reserve (about $300k/yr) and an amount earmarked for strategic infrastructure investments (about $4 million) which I will explain later.  The bulk of the reserves are controlled through policies that clearly identify what they can be used for.  It's essentially a savings account to handle unexpected situations.  As a general good practice in any business you ideally want to hold 3 to 6 months of revenue in reserves that can be accessed in case emergent situations.  To drain these funds to reduce taxes is short-sighted and will cost taxpayers much more in the long run as it only serves as a one-time benefit.  Bill Given and David Biltek both explain that concept better than I could.

As for the increase in the reserve for 2012, over $4 million was held as a strategic infrastructure investment.  In the budget deliberations, council and administration had some disagreements in terms of what the next infrastructure priorities should be.  I remember making the motions to defer some of those projects which accumulated to $4 million.  Instead, I felt that other projects should be moved ahead that have more strategic benefits to the City from an economic development perspective.  Other council members agreed, although we didn't have time to discuss all the potential projects available.  Helen Rice solved the impasse by parking the money in a strategic infrastructure pot to be decided upon at a future meeting.  This means that $4 million of road projects was not completed and would be redirected to different roads or other infrastructure.

Since the time of filing the 2012 Financial Reports, the decision on the spending has been resolved and the $4 million has been allocated.  Some of you may remember the $4 million in investment into Aquatera for a sewer main for the north-west part of the City.  This investment will ensure that commercial and industrial developments can happen up to 10 years sooner than anticipated.  Without it, development would have been stalled due to capacity limits being reached.  As an added bonus, the investment into Aquatera has the potential to produce discretionary cash dividends meaning that the City has the opportunity to recoup the original investment over time.

To sum up, each of the reserves is in place for reason and the amount in reserves is reasonable.  These have been used from time to time to stabilize operations and without them, city taxpayers would see large swings in their taxes from one year to the next.  There are no politicians out there who don't want to decrease your taxes where possible and no one out there really suggesting the reserves be collapsed and spent -- that's why it's not explicitly stated as a solution.  This is an example of careful wording in an attempt to instill enough doubt in the mind of the electorate.  Like I've said, I have a problem with these tactics and negativity that is directed at the whole City as an organization, which is why I had to speak out against it.  I'm hoping that people see right through it and focus on the actual facts.



Disclaimer:  The views and interpretation of information are my own personal opinion and do not reflect the views of the City of Grande Prairie, City Council or any of their affiliates.


4 comments:

Anonymous said...

Dan, the 34m in 2012 and 31m in 2011 of "net profits" Gladys is referring to is NOT in fact a cumulative total. These amounts are audited to have occurred in the period Jan 1-Dec 31. These "profits" are used throughout the year for capital assets and debt reduction. These items are not classified as expenses, so it appears the city runs a profit. However, the City requires extra tax dollars to cover items added on the balance sheet (infrastructure, debt payments, etc.).

While I won't debate the reserve process you mentioned, I find it unbelievable that the current and prospective council members have no idea how to read the City's financial statements.

Anonymous said...
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Anonymous said...

Thank you for your insight Dan. I am someone trying to make an educated decision on who I should cast my vote for. BUT.. I can't support someone who consistently smears people with their radio advertisements and now this. That is not the kind of integrity that I want for mayor.
Soooo..
Undecided voter + Blackmore's Campaign Values = VOTE GIVEN!
Thanks again, and thank you for the service you provided to our community.

Dan Wong said...

I guess the problem with making statements without pointing at line items is that people may not be referring to the same thing. I wrote on the assumption that we were talking about reserve balances and not accrual based accounting methods.