WHITECOURT - What has happened to Woodlands County's reserves?
That is the question councillors are hoping Alberta Municipal Affairs can help answer.
On Nov. 19 in Whitecourt, councillors unanimously voted to instruct the administration to ask the province to help explain what happened to the municipality's reserves. Whitecourt Central Coun. Ron Govenlock added the topic to the agenda.
He said he has been pondering the county's apparent lack of reserves for some time, but it has come more to the forefront of his thoughts since the councillors started debating what approach they were going to take to get the municipality's financial house in order.
In February, the county announced that it could face bankruptcy by 2021 if it wasn't able to collect $4.473 million in unpaid 2018 taxes. Since then that number has ballooned to about $9.5 million.
"In my research, I found an RFD [request for decision] that was presented to councillors on April 2 that summarizes the reserves Woodlands County expected to have available as $12.5 million," Govenlock said.
What he was referring to is the summary of reserves document presented to councillors by then corporate services director Sue Oberg. The document totalled all the municipality's different reserve funds as of Dec. 31, 2018, to be $12,493,833.
"The [reserves] were part of the contingency that I and other councillors were relying on to help us buffer the financial tax arrears problem that we are facing," Govenlock said.
On Sept. 17, councillors discussed several combinations of property tax increases and service reductions to generate an extra $22 million in revenue over the next three to five years. This revenue would be used not only to make up for the shortfall in uncollected taxes, but to build up their reserves.
However, they tabled the decision instructing administration to come up with a less aggressive revenue recovery plan.
This is in part because two weeks later, on Oct. 1, administration found approximately $3.1 million in budget savings following a review of their operating and capital budgets.
He added in his discussions with former administrators, whom he didn't identify, who have suggested the money should be there.
"If I take [as fact] the statement that we don't have the $12 million [in reserves] plus the $9 million that we didn't get in taxes that means that in effect there is $21 million that we need to recover. I'm just trying to find out where the truth lies," Govenlock said. "Either we have reserves and we are misinterpreting the information or we don't."
He then suggested a third-party conduct an audit on the status of the county's reserves.
Whitecourt East Coun. Jim Rennie said there was an issue with the county's accounting practices councillors should have been made aware of as part of the annual audit process. Corporate services director Alicia Bourbeau agreed.
"Generally council at the end of each audit receives a management letter," she said.
A management letter attests to the accuracy of the financial statements that the company or municipality has submitted to the auditors for their analysis.
Bourbeau said she is not sure why the county's auditor, Ernest and Young, did not prepare the letter.
The county has contracted a different auditor for 2019 and they will begin the process of going over the municipality's financial records in December.
Bourbeau suggested the county's new auditor would be able to provide the answers for council in a more timely fashion than she could.
