Sturgeon County will end the year in the red again this year as the high costs of the Redwater fire has forced the county to run a deficit for the second year in a row.
County councillors approved the transfer of $280,000 from their general operating reserve to cover a deficit the county has accumulated this year in large part due to the high cost of battling the fire.
The county's manager of financial services Rolland Russell told council that while he would rather be reporting a surplus, the $280,000 represents a rather small part of the county's overall budget.
"All in all we had a fairly good year as far as operating goes and staying within our budget."
Russell said the Redwater fire was a huge drain on county finances and there was only so much other departments could do to cut costs and cover that unexpected sum.
"We are looking at a deficit of approximately one per cent of our overall expenditures," he said. "I think the organization has done a good job in constraining its expenditures, knowing that we had this extraordinary fire."
The county is anticipating a $400,000 provincial grant to cover the cost of the fire, which cost nearly $1 million to fight. If that grant doesn't come through, the deficit will rise.
The $280,000 will come from the general operating reserve, which Russell told council still has between $1.6 and $1.7 million available.
Accounting rules
Though in reality the deficit is $280,000, on paper the county's reported deficit will actually be much greater.
The reported deficit is $894,000, but $614,000 relate to reporting rules around prepaid taxes the county is receiving.
The proponents behind the Fort Hills upgrader project gave the county $12.7 million in 2007 to help pay for major road upgrades that will be needed before the project gets under way.
Under the deal, the county begins to credit those prepaid taxes against the upgrader's annual property taxes when the plant is built or in 2013, whichever comes first.
Standard accounting rules covering how the county manages its books won't allow the county to credit that money until 2013, even though it is already in the bank and much of it has already been spent.
Under the Municipal Government Act, a municipality can't run a deficit for more than three years or the Minister of Municipal Affairs takes over its budgeting.
The county has received an exception from this regulation, but only for the Fort Hills costs and has to otherwise balance its books.
This is the third year the county has run a deficit, but in the first year it was entirely attributable to the Fort Hills upgrader funds. In the 2008 the county ran a whopping deficit of $3.8 million, most of which was due to the Fort Hills money. The real deficit was only $342,413.
Coun. Ken McGillis told council he is worried the county is not budgeting with enough room for the inevitable challenges that crop up.
"We are persistently drawing down our reserves accounts and we have a significant reluctance to set our tax rates where they should be to prepare for these contingencies."
Council passed the $280,000 transfer unanimously.
