City of Iqaluit shrinks deficit, net debt
But lack of bookkeeping at aquatic centre prevents audit of Aquatic Centre
The City of Iqaluit continued to chip away at its deficit last year, with administrators now predicting that it can be eliminated entirely by the end of 2018, after presenting the city’s latest end-of-year financial statements to city councillors on March 26.
The city’s acting chief administrative officer, Amy Elgersma, said the City of Iqaluit’s deficit now stands at about $4.26 million as of Dec. 31, 2017, down from the $6.2 million deficit reported at the end of 2016.
The city’s net debt shrank dramatically, from over $21 million in 2016 to about $12.6 million last year.
“We believe that eliminating the deficit is achievable by the end of 2018,” Elgersma told council members during a special finance committee of the whole meeting.
Three of the city’s six operating funds now report surpluses, while the city’s troubled water and sewer fund reduced its crippling deficit last year from $4.4 million to $2.3 million.
“All and all, it definitely was a good year on the financial management side, and our deficit situation is definitely improving,” said finance committee chair Coun. Kyle Sheppard.
But while council has good reason to be optimistic, the city’s new senior consultant for corporate services and accounting, Sherry Rowe, said “more hard work and hard decisions will still need to be made for this current fiscal year.”
That because most of the city’s deficit reductions have been made through cuts in staff and services, and while that’s improving the bottom line, Rowe said it’s also taking on toll on overworked city employees.
Rowe singled out the city’s finance department as “a bare bones operation,” with “some basic tasks that should be done [that] are not getting done because there is not a person there to do it.”
She also recommended that the city hire a finance officer dedicated to collections, as currently no organized collection effort is being made by the city for overdue payments, which is turn is having an effect on revenue.
And as part of a deficit recovery plan, which is currently being drafted by city administrators, Rowe said all city service rates would need to be reviewed, since many of the rates currently charged are “not sustainable” in relation to costs and the city’s existing cash flow.
“To me it looks like the city has more of a revenue problem than an expense problem at this point in time. We need to generate more revenue,” Shepard said.
Mayor Madeleine Redfern added that the Government of Nunavut has committed to review its funding formula for municipalities, which she said hasn’t changed in over 10 years.
Auditors attending the financial statement presentation told the finance committee that they were unable to give an opinion concerning the city’s new Aquatic Centre.
That’s in part because auditors were unable to audit revenue collected by the facility, which, according to Elgersma, was not operating with a “point of sale,” or POS, computer ledger system until recently.
The unverified revenue for the city’s aquatic centre, for its first year of operation, was still included, reporting sales of about $1 million.
But more than $3 million in expenses at the aquatic centre ultimately brought the building into an operational deficit of more than $2 million.
“Because we’ve operated for three months this year without that POS system, there is a chance that [the auditor’s] qualified opinion will show up next year,” Sheppard said.
Following the presentation of the financial statements to the finance committee on March 26, city council approved the statements during a regular city council meeting the following day.
During that meeting, councillors also passed a 2.15 per cent increase to the city’s mill rate, the rate at which property owners are taxed on the assessed value of their properties.