By Sheldon Spackman

Calling An Audible

Town of Sylvan Lake revising financial plan amidst COVID-19 pandemic

Apr 28, 2020 | 5:30 PM

Work is underway on a revised financial plan for the Town of Sylvan Lake due to impact of the ongoing COVID-19 pandemic.

On Monday, council received a financial update that outlined falling revenues and the anticipation of further revenue declines over the next several months.

As a result, council approved the elimination of penalties on the current year’s taxes, and waived penalties on utility accounts for late or non-payment until Aug. 31.

The waving of penalties on late payment of taxes and utilities is expected to cost the Town an estimated $185,000 in the 2020 fiscal year. However, Town officials say council has already approved for these revenue shortfall’s to come from reserves.

Assuming the status quo through the end of June, and excluding the reserve-funded reductions in tax and utility penalty revenue, officials add, the Town will experience a net savings of $238,000.

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However, once factoring in lost tax and utility revenue, those net savings are expected to drop to approximately $50,000. It’s noted this net savings is based on a number, or assumptions through the end of June which could change between now and that time.

Officials say the largest cost-mitigation measure taken to date as a result of Town facilities being closed and programs/events being suspended, has been the temporary layoffs of part time staff.

Estimates have been made for some rehiring in Parks and Municipal Enforcement, however, should those estimates prove to be inaccurate, it’s expected the projections would change considerably.

Meanwhile, department training and development budgets have been reduced for 2020, including a hiring freeze instituted.

Savings have been projected in goods and supplies, contracted services, and utilities. Utility cost savings have been estimated based upon comparing against year-to-date actuals from 2019.

The possible long-term consequences of the COVID-19 pandemic however, are perhaps the most profound, according to Town officials.

The effects of allowing residents to defer utility and property tax payments could result in significant accounts receivable. This means the revenue would continue to be recorded at normal levels, but with increased receivables, resulting in reduced cash flow.

In order to discharge its liabilities, it’s noted the Town would have to reduce operating and capital budgets in future years, and if needed, take on additional debt.

The balance of deferred payments however, won’t be completely known until early 2021, at which time planning can begin on how to mitigate the effects.

Town officials conclude utility arrears will reduce the amount contributed to reserves for future operating and capital projects.

The most likely result being the postponement or delay of many capital projects as outlined in the current 10-year capital plan should the deferral amount be in the millions of dollars.

Council has requested further information from Town administration on the current and updated Pandemic Financial chart.