City to spend $2.5M surplus on dam project
Nanaimo city council voted Monday to use a $2.5-million surplus from last year’s budget to partially fund the removal of two dams at Colliery Dam Park.
By reducing the amount of short-term borrowing for the estimated $7-million project, about half a per cent could be taken off of the 2014 property tax rate increase. Next year’s property tax rate increase is projected to be 4.7 per cent.
While city watchdogs have demanded the city return the money to taxpayers to eliminate any tax rate increase, Brian Clemens, the city’s director of finance, said by applying it to reduce borrowing costs, taxpayers will realize the same result.
“It will just be realized over time,” said Clemens.
As municipalities are not legally allowed to run a deficit, it is routine for cities to have some cash left over at the end of the fiscal year. Generally, that surplus is added to a general capital reserve until the money is needed.
Council’s other option to use the money was to repay $1.6 million of its own reserves for the new Service and Resource Centre Building and apply the balance of $900,000 toward the dam removal project.
As of Jan. 1, the city holds about $113 million in three reserve accounts.