Pique, Nov. 3, 2011
Where does the money come from when the municipality is slapped with an unexpected lawsuit?
How does Whistler pay when there's a mid-winter leak in the roof at the Meadow Park Sports Centre, or a major crack in an underground parking lot, or a bridge needs replacing right away?
Who pays for village infrastructure when it starts looking a little shabby and needs a facelift?
The task falls to the municipality and it pays for some of these things from money in its reserves - the closest thing to a municipality's savings account.
In part two of the budget series leading up to the election Pique examines the state of those reserves, which are set aside for things like unforeseen capital expenses like the recent $5.7 million debris barrier, infrastructure upgrades and a gamut of things in between.
Whistler has $40 million in the bank in its general reserve fund. The question is: is that enough? Is it too much? Does the community need to be worried about paying into its savings plan when it's struggling to pay for transit and other critical things it needs today?
Cutting reserve payments is one of the most painless ways to balance the books... in the short term. But the ramifications of today's decisions could have big impacts down the road for future generations.
Admittedly, putting money away for the future isn't nearly as glamourous as building a new state of the art library or giving money to non-profit groups, but it is a critical part of municipal budgeting.
"That's so you don't get caught with no money in your pocket when you've got an emergency expense," said Mayor Ken Melamed. "The alternative is you've got to go borrow.
"We have so ingrained in ourselves this discipline about sound fiscal management. We need to build reserves back to levels which meet forecasted needs. That's the best practice. We are committed to best practices."
At its low point in 2008, Whistler was putting aside 11 per cent of property tax revenue into reserves - about half of what needs to be set aside each year. That year the province changed its tax legislation, which had immediate ramifications to Whistler's budget to the tune of more than $2 million. Temporarily cutting reserve payments was the fastest way to combat the blow but not something that could be sustained over the years.
"The downward trend in contributions is a concern that RMOW will need to address," according to the Long Term Financial Plan, developed in 2009 with input from outside experts.
It recommended: "Annual contributions to reserves should be increased."
Council took that recommendation to heart.
It approved year-over-year tax increases from 2009 to 2011 in part to get reserve payments back up to about 19 per cent. That's roughly $6.3 million of tax money, out of the $33 million that's collected from property taxes, that goes into savings.
When asked about raising taxes for savings the mayor praised council for making an unpopular decision for the long-term benefit of the community.
"This is not about popularity," he said. "The role of an elected official is to do what's best for the community. What's best for the community is to keep costs as low as possible while respecting the long-term need. You need to do what's right, not what's good for you."
There is, however, no rule of thumb, no municipal requirements that state exactly how much should be set aside each year in savings.
Some cities have big reserve funds. Others have very little in their savings.
One thing is for certain: infrastructure across the country from roads, to waterworks and transit networks, and much more, are aging by the day. In 2007 the Federation of Canadian Municipalities put the country's infrastructure debt at $123 billion. Most of the nation's civic infrastructure dates back to the 1960s and '70s. Time is ticking on its replacement.
Whistler's infrastructure isn't quite as old but the writing is on the wall for what can happen if there isn't money in the bank to pay for it down the road.
Based on historical cost, municipal staff judges the reserve contribution should be at 20 to 21 per cent.
"It's an ambitious target," said the mayor. "I'm not sure we're going to get there."