City council has decided not to change the way it deals with budget surpluses.
On a 9-4 vote, council defeated a motion Monday by Coun. Cam Guthrie calling for a policy on the issue that includes “consideration of returning tax-supported surplus to the taxpayers first, where doing so does not drop the tax rate stabilization reserve below stable levels.”
Guthrie said his motion aimed to “provide a lens” for city staff “that thinks of the taxpayer first” when the city enjoys an annual surplus in the operations of its tax-supported departments.
Mayor Karen Farbridge said she agreed with setting a city policy on dealing with surpluses. Currently, the city has practices that it follows for distributing surplus money, but has no formal policy.
However, she said the city already has an efficient way of using surpluses to benefit taxpayers. Such money is often put into the city’s rate stabilization fund, which can be used to reduce the property tax hike in the next year, she said.
The mayor also took a swipe at the way the council led by former mayor Kate Quarrie dealt with the issue of surpluses. Quarrie’s council, Farbridge charged, set a budget for 2006 that “gambled” on the city having a surplus that year.
“It was a short-term, high-risk political decision in an election year,” involving about $2 million, Farbridge charged. She said it helped create a revenue shortfall later on that caused problems for the city.
Farbridge said she didn’t want to see a return to “risky” behaviour at city hall that could send the wrong message to credit rating agencies, and she suggested Guthrie’s motion could be viewed in this way if council were to approve it.
Backing up the mayor, Coun. Todd Dennis said putting surplus money into the rate stabilization fund ensures that it’s available to minimize later tax increases, so long as the city’s reserves are at stable levels.
“So we are already looking out for the taxpayers first,” Dennis said.
Joining Guthrie in voting for the motion were councillors Bob Bell, Jim Furfaro and Gloria Kovach.