New policy on surplus funds

 Photo: Castanet Staff

A new year-end budget surplus policy was approved by Penticton city council earlier this week.

The new policy, effective immediately, will provide better clarity, direction and authority on how to allocate any general surplus, according to city staff.

Controller Angela Campbell pointed out that Penticton is following the lead of other cities in B.C. that have already put the policy in place.

"We certainly aren't counting on having a surplus. This policy just gives us direction on what we do with it when it happens," Campbell told mayor and council on Tuesday.

General year-end surpluses will be managed in two different categories — above and below $500,000.

In any annual surplus, 40 per cent will go into an accumulated surplus reserve. If the surplus is above $500,000, up to $100,000 will be allocated to the RCMP services reserve, and up to 10 per cent will be put to the newly-created financial stabilization reserve.

The RCMP reserve takes priority because policing is "susceptible to unexpected increases when an unusual crime event occurs," staff said in a report.

The new financial stabilization reserve will "fund major emergency operating issues, one-time and intermittent projects, and could be used to offset unrealized revenues."

Any remaining funds, whether the general surplus is above or below $500,000, will be put into the equipment replacement reserve (33 per cent) and the asset emergency reserve (67 per cent).

Before this new policy, the management of surpluses varied from one year to another, chief financial officer Jim Bauer said.

Bauer added the move will help adopt best financial practices for the city, and ensure fiscal sustainability.