Audit shows City ended 2017 with surplus

Surplus will help close funding gap expected in 2019

The City of Fredericton ended 2017 with a $2.2 million surplus in the General Fund operating budget and a $600,000 surplus in the Water & Sewer Utility operating budget.  The information was contained in the clean audit opinion provided by the City’s external auditors, EY.

The surplus comes from additional revenue received during 2017 and ongoing improvement and innovation efforts being undertaken by the City. These include:

  • $350,000 increase in building permit revenue above budget
  • $250,000 increase in parking revenue above budget
  • $120,000 increase in transit revenue above budget
  • $200,000 in savings from building services, including efficiencies from usage of natural gas, lights and power, and water & sewer
  • $100,000 in savings from fleet services, based on decreased fuel consumption and pricing decreases
  • $100,000 in savings from our garbage contract, coming from a decrease in tonnage and fuel costs for the year
  • In addition, there was a variety of savings from the City’s subsidiary entities:  e-Novations Comnet, Inc., the Fredericton Convention Centre, and Newmarket Properties Inc. (Fredericton Boyce Farmers Market)

In regards to the surplus in the Water & Sewer Utility operating budget, revenue was as projected.  Efficiencies and savings came from similar areas as in the General Fund – fuel, fleet, as well as lights and power. The surplus will be reinvested into infrastructure renewal efforts to replace aging pipes, etc.

“The audit continues to point to the fact that we are financially well managed as a city,” said Coun. Greg Ericson, Chair of the City’s Finance & Administration Committee. “However, the surplus does not represent a windfall of cash.  With property tax revenues slowing and the cost of living increasing, the surplus will help close the funding gap already expected in our 2019 budget.”

Other highlights:

  • 2017 achievements include a reduced long-term debt, continued investment in infrastructure, and a balanced budget plan, ended with a surplus
  • The service area with the biggest spending at the City was public safety ($39.8M), followed by Mobility ($30.3M), Liveable Community ($21.5M), and Water & Wastewater ($15.8M), with Economic Vitality, Governance & Civic Engagement, Environmental Stewardship, Sustainable Infrastructure and Corporate Services have a combined total of $17.4 million.
  • Salaries and benefits were the biggest expenditures at the City in 2017, totalling $64.9M.  Goods and amortization costs, as well as interest and other expenses totalled brought the total expenditure for 2017 up to $124.7M.  This is an increase of $6.7M from 2016.
  • Total revenue for 2017 was $150.9M, with property taxes making up $99.3M. 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 $10.5M from 2016. This mostly came from third party contributions provided by the provincial and federal government.
  • The City used a $3.6M surplus from 2016 to help balance the budget in 2017.  The shortfall in 2017 resulted from the property tax assessment freeze and operating costs rising faster than revenues.  Projections for 2019 means that by having a $2.2M surplus in 2017, the City will need to find a projected $1.4M for the 2019 Budget.

In summary, the 2017 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 is governing, budgeting and managing for results,” said Coun. Ericson.

More information about the audit can be obtained by visiting the City’s audited financial statements web page.