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On occasion community stakeholders are misinformed about policies and reports approved by Council. While staff endevours to ensure complete transparency, there are issues which are complex and require further explanation. Recently, there has been some confusion among some members of our community on a staff report adopted by Council seeking authority for the Treasurer to proceed with a debt issue.
First of all, we would refer anyone concerned with this story to read the staff report that was presented to Council on 11th April 2011.
There are fifteen projects on this list. Each one of these projects was approved by the Council of the day in the capital budget with a funding source of long term debt. None of these projects are new in nature or represent overspending of the original approved amount.
Each project has now been completed, and in accordance with prudent fiscal management staff are seeking to issue the long term debt that has already been approved.
Debt funding does not occur until the underlying projects are fully complete, we are certain of the full amount of the expenditure, and our auditors have had an opportunity to review our needs . Issuing debt at the time of capital budget approval would not be fiscally responsible since
- we would be incurring interest charges before the work has been done
- it is conceivable that the project may be delayed or cancelled
- the actual amount required is not yet known. We would not want to borrow more than we actually need.
The process is to wait for identified project completion and then bundle a number of projects together to form a debt issue. This fiscally responsible process will be less time-consuming, more marketable to potential investors and attract a lower rate of interest.
From a cash flow perspective, these expenditures have all been paid from our general bank account, and until such time as the long term debt is issued, we will be incurring higher short term borrowing interest charges from our bank.
Treasury staff are working diligently to put this Municipality on solid financial ground, and it is imperative that we clean up the approved funding of these old projects in order to lower the interest costs we are currently being charged.
On 13th December 2010 Council endorsed a debt management policy for the Municipality of Meaford to govern the types of capital projects that would be eligible for funding by long term debt in 2011 and future budget years.
We will no longer consider funding the replacement of existing infrastructure with long term debt.
Long term debt will only be considered to fund the Municipal portion of growth-related infrastructure where the individual project value exceeds $250,000 and the estimated useful life of the asset is greater than 10 years. In these circumstances long term debt is considered an appropriate means to achieve a fair allocation of costs between current and future beneficiaries.
I encourage our community to contact me or any member of my senior management team to discuss any issue they may have. Meaford has a bold and brilliant vision that can transform not only our community, but our County. Staff's door is always open and ready to work collaboratively with our Citizens.