In the red

Port aux Basques slipped into the financial red in 2008, but councillors aren't worried about the town's fiscal health.

The town ended the year with a deficit of $77,639.

Mayor Brian Button said that's not bad given the town is a $45 million operation, with an annual budget of just under $4 million.

"I can live with what I see here," he said of the presentation of the town's audited financial statements to council on Aug. 18.

Councillor Cory Munden, head of the council's finance committee, made the presentation and highlighted some of the areas where the town was either over or under budget.

The town's biggest overage was from capital expenditures out of revenue. It spent approximately $262,000 more than budgeted to complete projects such as the new roof on the town garage, phase one of the Grand Bay Road retaining wall and purchase of a new pickup truck.

The amount included in the 2008 budget for this type of activity was $12,400, but the town spent $274,186.

The full amount can't be budgeted for because the town doesn't know what cost-shared funding the other levels of government may approve in the coming year. By choosing to pay upfront instead of borrowing, the town doesn't increase its long-term debt and reduces the amount of interest it has to pay.

A harsh winter combined with dramatically increasing fuel prices meant the town busted its snow and ice removal budget by nearly $60,000. It spent $315,482 on these services in 2008 compared to $245,349 the previous year.

Port aux Basques also spent about $52,000 more than the budgeted amount on road, street and sidewalk repair.

The provision of environmental services, including water and sewer systems, cost the town nearly $39,000 more than planned, reaching $619,436.

Coun. Munden said much of that amount was spent at the water treatment facility. He added the new study being undertaken of that facility should identify efficiencies the town can cake advantage of to reduce costs.

The purchase of satellite telephones and a new air compressor for the fire department helped push the town's protective services spending over budget. At $76,427, the amount was more than $11,000 over budget.

The town paid less for general government than expected. Costs for council, administration, property assessment and other services were $595,983, which was just over $20,000 under budget.

Also under budget were the categories of planning and development ($12,468) and recreation and culture ($4,063).

The Bruce II Sports Centre again cost the town more than expected. Port aux Basques spent $251,097 on the facility, which was about $24,000 over budget.

Coun. Munden said that while revenues at the Bruce II have increased by about 11 per cent since 2007, expenses are up by almost 35 per cent. The largest expenses are wages and benefits, heat and lights, and repairs and maintenance.

Coun. Munden explained the town also made changes over the last few years to the way it accounted for some things related to the Bruce II, which impacted some of the numbers.

The changes were to more accurately account for what the facility costs the town. For example, the insurance costs are now accounted for under the Bruce II instead of under the town as it was previously done.

Port aux Basques has capitalized on historically low interest rates to decrease its long-term debt, said Coun. Munden. The town's debt was reduced by nearly $141,000 to $1,403,154 in 2008.

He said some borrowing will have to occur to fund upcoming capital works projects, but warned that the town will pay more for its debt in the future as interest rates climb back up.

While the tax base in Port aux Basques is holding its own, Coun. Munden would prefer to see it increase. He said growth is always preferable, especially in the face of rising costs due to inflation.

The town's tax base took a hit with the loss of the fish plant, which the continued development of Smallwood Drive will help offset to some extent.

Uncollectible or delinquent tax accounts continue to be an issue for the town.

"If you have taxpayers who don't pay, we're all impacted," said Coun. Munden, adding mil rates may have to eventually increase because of it.

Town Clerk Donna Bragg noted some of the efforts that are onging to collect back taxes, including wage garnishments, shutting off water to properties, and legal action.

Mayor Brian Button said residents need to understand the town doesn't operate for free.

"There's a service and it comes with a price tag," he said.

The mayor added that Port aux Basques has been fortunate to be able to be progressive in making improvements, by being financially able to take advantage of cost-shared programs and the like.

At the end of 2007, the town was in an accumulated surplus position of $101,258. Much of that amount was from planned projects that were pushed into the following year.

editor@gulfnews.ca