City of Iqaluit finances on “right path,” CFO says

The City of Iqaluit’s new aquatic centre, which is set to open in early 2017. (PHOTO BY STEVE DUCHARME)

The City of Iqaluit’s chief financial officer, John Mabberi-Mudonyi, says the city is on “the right path.”

He’s cautiously optimistic after newly released second-quarter financial statements reveal some signs of stability after years of budgetary free-fall.

Those statements, detailing expenditures between April, May and June of 2016, show modest gains across the city’s various accounts, as well as a reduced overall deficit.

“I don’t know what the future holds but the trend is moving the right way,” Mabberi-Mudonyi told Nunatsiaq News Oct. 14.

According to its consolidated financial statements, the city’s current net debt—subtracting the municipalities total liabilities from its assets—stands at $7,804,210, as of June 30, 2016.

The city’s annual intake of property taxes, accounted for during its second-quarter, has temporarily lifted the city’s out of a deficit, although Mabberi-Mudonyi explains the influx of money is a short-term relief that will erode by the end of the year.

But he says that’s still an overall improvement from the estimated $8.2 million deficit facing the city when Iqaluit mayor Madeleine Redfern and the rest of city council were sworn into office Nov. 2, 2015.

Other operating funds—accounting for lands, sanitation, water, and community health—show signs of stability over 2015 year-end figures although still operate under deficits.

And, despite the influx of property taxes, the city’s general fund has been operating in the black since last year.

Mabberi-Mudonyi says keeping the operating fund fluid has been a priority in light of the city’s soon-to-be-completed $40.5 million dollar aquatic centre.

“That’s a big monster. We have to be able to manage that asset,” said Mabberi-Mudonyi, who estimates the annual operating expenses of the aquatic centre will stand at around $4 million.

Alongside standard expenses for operation and maintenance, at least some of that annual price tag will go towards paying down the substantial loans undertaken by the city to build the facility.

An additional $2 million was spent on aquatic centre commitments in the second-quarter: contributing to the city’s current long-term debt of $32,739,657 million, up from $30,339,554 in 2015.

The aquatic centre will never be profitable for the city, Mabberi-Mudonyi says, but he hopes the city will eventually see a 60 to 80 per cent return on it’s investment.

“There’s no way you’re going to make a buck on that,” he said.

City administrators aim to eliminate their land and development deficit by the end of the year while also setting a goal to eliminate the deficit in the water and sewage fund by 2018, Mabberi-Mudonyi said.

That fund currently sits at negative $4.9 million, a deficit that is $431,000 lower than in its 2015 year-end statement.

Much of the money used to pay down the deficit will come from federal and territorial payouts but Mabberi-Mudonyi says the city will still need to reevaluate charges to residents to make the fund sustainable.

“We’re looking at the water rate,” he said, while admitting that it is a politically sensitive issue.

“But it is a venture that needs to be addressed.”

Any increase to the water rate would still retain subsidies from the Government of Nunavut, Mabberi-Mudonyi added, so residents would not feel the full effect of any rate increase.

Many of the city’s services charges—including a controversial increase to the car disposal fee—are set to be revised and amended under a consolidated fees bylaw, set to have its final reading before city councilors at their next regular meeting Oct. 25.