Bradford has made “a great amount of progress” and is “doing a very good job” of investing funds to cover the eventual replacement cost of town assets, according to Ian Goodfellow, the town’s finance director and treasurer.
Those comments came as part of a presentation to council explaining a report from Nathalie Carrier, deputy treasurer, based on the finalized 2024 budget and business plan included in council's June 4 meeting agenda.
The report comes as part of the town’s commitments under the Municipal Act since 2009, to reconcile different accounting and reporting methods in accordance with the Public Sector Accounting Board’s (PSAB) requirements.
That includes looking at the amortization costs, or the amount by which the cost of the town’s tangible capital assets — including land, buildings, fleet, sewers, roads, etc. — are spread out over their useful lifetime, which can also be used to predict their eventual replacement costs.
Based on historical trends, Carrier estimated that in 2024 amortization will be about $19,928,770, but the town only budgeted $16,409,108 based on $1,290,989 transferred to reserves, $6,296,592 from user fees, and $8,821,527 from the town’s special capital levy.
While the tax levy portion actually sees a surplus of $233,809, a “deficit” of $3,753,471 in user fees leaves an overall shortfall of $3,519,662.
However, Goodfellow explained that deficit is essentially “theoretical” in nature and will have no impact on the 2024 budget, which is “set in stone” and contains no actual deficit, as the Municipal Act requires municipalities to adopt a balanced budget.
“Some would suggest ... as your assets come down, you should be saving money to replace them over time, but that would be a $220 million number and that’s something that no municipality in the province is achieving,” he said.
That’s based on the total amount of capital assets the town has acquired since founding in 1857, which Goodfellow estimated to be more than $800 million, though he added that figure is based on historical costs, and the replacement costs would be “far more” in current dollar value.
The town is also required to adopt an asset management plan to forecast replacement costs, but that plan is still a work in progress, for which a more detailed report is expected at the next regular council meeting.
“This has all evolved into what we’re dealing with today in terms of making sure that we’re being proactive and prudent in managing the assets that are out there in the community,” Goodfellow said.
In an interview after the meeting he also emphasized that while the town has been acquiring assets for more than 150 years, it’s only been since 2009 that legislation has required they be financially sustained.
“We’re doing our best, but you can’t fix that in a tenth of that time,” he said.
As another measure to help prepare for the eventual cost of replacing those assets, council implemented a special capital levy in 2013 set at one per cent and increasing by one per cent per year. The levy is set at 11 per cent for 2024.
In 2012, the year before the levy was implemented, Goodfellow said the town’s amortization was only about $10 million, and the town was investing about $4.5 million, leaving a funding gap of about $5.5 million.
Now, the amortization amount has almost doubled, but the amount the town is investing has more than tripled, causing the gap to shrink to about $3.5 million, which Mayor James Leduc called a “huge” difference.
That progress was highlighted by Sue Bragg, representative from auditor Baker Tilley, during the June 20 council meeting last year as part of a presentation about the town’s 2022 financial statement.
“This is really where Bradford shines,” Bragg said at the time. “Despite the investments that have been made in infrastructure, Bradford West Gwillimbury has continued to put money away in reserves. Despite the huge growth you’ve seen in the community and the necessary investment you needed to make in infrastructure, you didn’t forget about putting money away in reserves and reserve funds.”
The report on the town’s 2023 financial statement is expected to be included as part the next regular council meeting.
In the meantime, the mayor assured residents the town would continue to maintain its assets in a “responsible way,” even though he doesn’t expect the funding gap to ever hit zero.
“I’m proud of what we’ve done, proud to say we will continue to support the special capital levy because that is great financial planning for the community,” he said. “We want to provide for our residents but at the same time we have to be frugal with our funding and make sure we don’t overburden the residents.”
That balancing act could spell trouble for the town’s capital replacement reserve, though, and in his report on the draft 2024 budget, Goodfellow said that, without increasing the rate at which the special capital levy grows, the capital replacement reserve would be depleted by 2025.
In January Goodfellow explained a depleted capital replacement reserve would most likely lead to some projects scheduled for 2025 or 2026 being delayed by a year or two.
“The reality is we’ll have to revisit the capital program. If there’s no more money going in, we need to reduce the amount of money coming out,” he said.
According to Carrier’s report, the total municipal portion (including for the library) of taxes to be collected by the town increased to $28,294,178 in 2024 from $26,958,074 in 2023.
Originally, the property tax increase for 2024 was estimated to be about 4.26 per cent, but following more information from the County of Simcoe, was later revised to 4.21 per cent, or about an additional $217 for the average home.
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