The Village of Burns Lake currently has over $3.8 million in its reserve funds, which are set aside by municipalities for capital projects or to offset financial risk.
But is $3.8 million enough for a municipality of almost 3000 people? And is Burns Lake doing enough to grow its reserve funds?
Earlier this year, the village told Lakes District News that a contribution of over $400,000, which was “above council’s goal,” had been made to the village’s reserves in 2017.
“Over recent years, the village has set significant target reserve contribution levels that we feel are sufficient for future funding needs,” said Burns Lake Mayor Chris Beach earlier this year. “We have been able to meet these contribution levels every year.”
However, after a closer look at the village’s finances, it’s clear that Burns Lake actually went backwards in 2017. While the village did in fact deposit $402,079 to its reserve funds, plus $328,289 that originated from Comfor, between 2016 and 2017 the village withdrew $771,483 for current projects, setting the village back $41,115.
And although the village has committed to depositing approximately $244,000 to its reserve funds each year, the municipality’s reserves have actually been decreasing in the past five years. In 2012, Burns Lake’s reserve funds were sitting at approximately $5.6 million - nearly $1.8 million less than the amount in there today.
According to Sheryl Worthing, Chief Administrative Officer for the Village of Burns Lake, the village’s main expense in the past five years was the $2.4 million for the Lakeside Multiplex, which was built in 2014.
Nevertheless, Burns Lake has not been significantly raising taxes to offset some of these expenses. Since 2012, the highest tax rate increase in Burns Lake was one per cent. The 2017 budget reflected a zero per cent increase in taxation rates for both businesses and residences.
Earlier this year, Burns Lake councillor Kelly Holliday said that not raising taxes has not been good for the municipality.
“If we’re only raising taxes to one per cent, or not raising them at all, we’re getting behind,” she said. “It’s making it very difficult for us to save money for future projects or to replace infrastructure or repair infrastructure as it breaks.”
Lakes District News also asked a couple of nearby municipalities how much money they had in their reserve funds. Houston, a municipality of similar size, was sitting at $3.9 million at the end of 2016 while Smithers, a city of over 5000 people, was sitting at $8.19 million.
According to the provincial government, B.C. legislation does not specify a recommended balance of reserve funds that local governments should or must hold.
“How much a local government chooses to hold in reserves is a financial and political decision of the democratically elected council of each municipality,” explained Lisa Leslie, a spokesperson for the Ministry of Municipal Affairs and Housing. “It is their fiduciary duty to ensure sound financial planning for their taxpayers and reserve funds form a part of the financial planning framework.”