District of Lantzville making changes around how it spends surplus money

Changes are coming to the way councillors can manage the District of Lantzville’s surplus fund.

Lantzville councillors, during a council meting this month, gave the first three readings to a proposed bylaw that if approved, would provide some clarity to the way council can choose to spend money from the district’s surplus fund.

According to a staff report, the proposed bylaw would cap the amount of money that the district could hold in surplus at $1 million. If the surplus fund exceeds $1 million, money could be contributed to other reserve funds.

The proposed bylaw would also prevent council from using money in surplus to balance an annual operating budget according to the report, which also notes that councillors would only be able to use surplus money for capital projects that “do not add annual maintenance costs,” according the report.

There are currently no policies or bylaws that stipulate how general operating surplus should be used. Council, at the moment, does not need to ensure that there is a minimum or maximum balance in their surplus fund.

Should council fully adopt the bylaw, the changes would provide more flexibility to councillors as it would allow them to allocate money to existing reserves that are either dedicated for funding priority projects or services such as snow removal, the report notes. It also would help mitigate property tax increases because the district can “replenish reserves or fund projects without having to assess rate increases to replenish” the funds, the report states.

During last week’s council meeting, Ron Campbell, the district’s chief administrative officer, pointed out an example of how the proposed bylaw would work, explaining that the district currently has a $66,000 shortfall in its budget for snow removal because council hasn’t properly funded winter road maintenance and as a result the budget has declined over the years when it shouldn’t have. He said the proposed bylaw would allow council to reverse the deficit by taking the money from surplus and moving it into the snow removal fund that currently exists, instead of having to raise property taxes to pay for snow removal.

Campbell also said ongoing operating expenses should never be funded from surplus because they are ongoing expenses and should come from increased taxation.

However, Coun. Ian Savage said the proposed bylaw “hamstrings” councillors by limiting their ability to do what they like with surplus money and opens the door to property tax increases.

“Council should retain the right to allocate surplus as they see fit. Why would councillors, meaning us, want to impose a bylaw on ourselves instead of trusting our judgement?” he asked. “This bylaw leaves out the possibility of using surplus to directly reduce property taxes.”

Coun. Will Geselbracht took an opposing view, explaining that he felt it was necessary to cap general surplus so that the district isn’t running the “Lantzville credit union” on taxpayer money.

“What we don’t want to is just keep building a bigger and bigger slush fund that has no intended purposes,” he said.

Coun. Jamie Wilson, who ultimately voted against the motion, said he agreed with Savage’s comments. He said he has been a strong supporter of not using surplus to pay for items, but felt council should keep all of its options on the table.

“Things are becoming much more expensive, our community is going to be growing, it is going to be having higher demands on it. I’ve bene a huge proponent of not reaching into our surplus to pay for things and making sure that we tax our expenses, but I do appreciate where he is coming from in that I feel we shouldn’t be taking away our flexibility.”

Meanwhile, Mayor Mark Swain said the proposed bylaw is designed to stop council from dipping into reserves to balance the budget and was supportive of it.

In the end councillors voted 4-1 in favour of passing the first three readings of the bylaw. Savage was the only councillor to oppose the motion.