Audit confirms City ended 2018 with surplus

Surplus to be used for unexpected future costs

The City of Fredericton has ended the 2018 fiscal year with a $2.0 million surplus in the City’s General Fund operating budget and a $1.9 million surplus in the Water & Sewer Utility operating budget.  The information comes from a clean audit opinion provided by the City’s external auditors, EY.

“A surplus shows that our fiscal plan is working,” said Coun. Greg Ericson, Chair of the City’s Finance & Administration Committee. “However, this doesn’t mean we still don’t face challenges in the years ahead. We will continue to focus on providing sound management of the City’s finances and these additional funds will allow us the ability to deal with any unexpected costs in the next budget.”

The General Fund surplus occurs after a challenging budget process where the City had to address unexpected costs due to multiple unprecedented events during the year. However, ongoing improvement and innovation efforts by City staff produced a surplus.

These include a:

  • $650,000 increase in building permit revenue above budget
  • $400,000 increase in cash flow and investment management revenue above budget
  • $295,000 increase in transit revenue above budget
  • $195,000 in savings from building services, including efficiencies of natural gas, lights and power, and water & sewer 

A significant portion of the surplus to the General Fund is also the result of savings occurred late in the fiscal year when the federal government agreed to cover the costs of the regimental funeral.

The surplus in the Water & Sewer Operating Budget is due to a change in accounting practice with the new financial system where tracking inventory is done in a new way which will result in a one-time savings in the materials. These funds will be reinvested into infrastructure renewal efforts to replace aging pipes, etc.

Other highlights:

  • 2018 achievements include a reduced long-term debt, continued investment in infrastructure, and a balanced budget plan, ended with a surplus
  • The addition of Chateau Heights provided $13.5 million in infrastructure
  • The service area with the biggest spending at the City was public safety ($40.3M), followed by Mobility ($31.4M), Liveable Community ($22.2M), and Water & Wastewater ($13.4M), Economic Vitality ($6.5M), Governance & Civic Engagement ($5.5M), Environmental Stewardship ($4.3M), Sustainable Infrastructure ($1.3M) and Corporate Services ($900K).
  • Salaries and benefits were the biggest expenditures at the City in 2018, totalling $67M. Goods and amortization costs, as well as interest and other expenses totalled brought the total expenditure for 2018 up to $125.8M. This is an increase of 1.1M from 2017.
  • Total revenue for 2018 was $161M, with property taxes making up $100.2M. The rest of the revenue comes from sales, fines and other fees, services to other governments, community funding grants, return on investments, third party contributions from developers, as well as the provincial and federal governments. The City experienced an increase of $10.1M in total revenue from 2017. This mostly came from third party contributions provided by the provincial and federal government.
  • The City used a $2.2M surplus from 2017 to help balance the budget in 2019. The shortfall in 2019 resulted from unexpected increases in operating and personnel costs.
  • Projections for 2020 means that by having a $2M surplus in 2018, the City will need to find a projected $300K for the 2020 Budget.

In summary, the 2018 Financial Statements results show the City has obtained a clean audit opinion, is using key strategies to mitigate risks, and shows that strategies are working. The City is setting long-term goals that allow for flexibility and adaptability, and pressing forward with a vision for the community. The audit shows prudent financial management and responsible governance by the Mayor and Council.  The City’s fiscal year runs from January 1 to December 31.

More information about the audit can be obtained by visiting the City’s website at www.fredericton.ca and searching for audited financial statements.