Erin councillors vote to build reserve fund to reign in possible tax increase next year

ERIN – Erin town council decided to put a $422,792 surplus from 2019 into the tax rate stabilization reserve in an effort to reduce or eliminate the need for a property tax increase in 2021.

“That gives us 5.5 per cent leeway for next year,” said councillor John Brennan, as he introduced an amendment to the 2019 fourth quarter variance report.

Brennan was speaking at the Town of Erin’s first council meeting since the COVID-19 outbreak began.

The meeting was live-streamed on April 21 from council chambers. The mayor and three of the four councillors were spread two metres apart around the horseshoe and at least five staff were in chambers as well. All of them were wearing their Town of Erin spirit-wear hockey jerseys.

Brennan took part by phone.

In the report, treasurer Ursula D’Angelo had recommended splitting the surplus equally between the tax rate stabilization reserve and the infrastructure renewal reserve and then taking $100,000 from the tax rate reserve to cover some of the cost of the new elevator in the administrative building and a new dump truck.

The cost of the elevator is $340,585 and the dump truck is $239,086.

The report also recommended drawing $203,761 from the working capital reserve and $275,910 from the infrastructure renewal reserve to pay off the balance of the two capital items.

D’Angelo said the projects were approved to be funded with debt, but because there is cash in the reserve funds, “and because of the small amount, I recommend changing the funding.”

Brennan’s amendment removed the $100,000 capital cost payment from the tax rate stabilization reserve and shifted it to the infrastructure renewal reserve, on top of moving the entire 2019 surplus to the tax rate stabilization reserve.

Brennan said building up this reserve fund would soften the blow for taxpayers in 2021, who will still be reeling from the economic fallout of COVID-19.

“Putting (the surplus) in the tax rate stabilization reserve will put us in better shape for next year,” Brennan said.

“I’d like to get as close to zero tax increase as I can, and this will give us the freedom to do something positive next year. It would lighten the burden on our taxpayers.”

The amendment was unanimously approved.

Council also passed a temporary borrowing bylaw that will allow the town to borrow up to $3 million between now and December 2020. That’s an increase from last year’s bylaw that allowed the town to borrow a maximum $1.5 million. The town can use such a fund to cover cash flow issues resulting from emergency expenses.

D’Angelo said the town has never had to use the funding before and right now the balance sheet looks positive, “although we have seen some trending of lowered cash.”

The province has allowed lower tier municipalities to defer the spring payments to upper tier governments and school boards to ease cashflow issues, but by December, two instalments will be due.

D’Angelo said she’d rather keep on top of payments to Wellington County and the Upper Grand and Wellington Catholic district school boards and have this cushion instead.

“We have to pay [them] whether we collect the funds or not,” she said.

But given the widespread financial crisis and associated uncertainties, the extra borrowing capacity would allow the town to deal with extra costs and lower revenues should these circumstances arise.

“It does seem we will have enough. We would like to have this… just in case,” she said.

CAO Nathan Hyde said he will bring a more detailed financial accounting to the May council meeting.

“We have taken some interim steps to reduce expenditures,” he said, adding he’ll also produce a list of all the tax-supported projects in the queue for council to examine.

“We’re all feeling it’s premature to do any cutting, but it will be good to have a look at it,” said Mayor Allan Alls.

Council also approved the Service Modernization funding report that allocated $402,373 in federal funding for several IT and computer hardware upgrade projects.

Council approved the allocation of $20,000 in community grants, although requests totalled $49,000.

Fire Chief Jim Sawkins said the RFP for a new tanker truck came in under budget at $409,340 and will soon begin the design process. He expects delivery of the truck in January 2021.

Nick Colucci, director of infrastructure services, said the town has determined that test well E9 north of the village Erin, and test well H4 in Hillsburgh, are the preferred sites for new water towers as the town plans increased water supply and storage systems as it prepares for growth.

The next step is to apply for a water-taking permit from the Ministry of the Environment to continue testing.