FORT ST. JOHN, B.C. — The City of Fort St. John is “financially healthy” despite upcoming budget challenges for 2024, according to the city’s Chief Financial Officer David Joy.
“We do have challenges coming up. We had a deficit in 2022, which is addressed in the 2023 budget, but we still have other budget challenges coming up for 2024,” said Joy.
He noted there “isn’t any fat in the budget,” which means the city’s financial department needed to make adjustments while drafting the 2024 budget, set to be presented to the city in October or November.
“We need to raise tax revenue, in addition to looking at using more of the Peace River Agreement money and possibly the BC Hydro legacy grant revenue,” said Joy.
Joy presented a report to council detailing Fort St. John’s financial health compared to 13 similar-sized B.C. municipalities during Monday’s committee of the whole meeting.
The report states that although Fort St. John is the second-highest of 13 municipalities when looking at salaries and benefits, the city has a significantly larger capital program than the other municipalities.
As a percentage of total cash expenditures, Fort St. John has the third-lowest, at 23.3 per cent.
Thanks to revenue from the Peace River Agreement, the City of Fort St. John has had the freedom to repair roads, build a new RCMP detachment, beautify the downtown area, and purchase equipment and other projects without going into debt or raising tax revenue for the capital program.
The city received $30.5 million in grant revenue, representing 34.4 per cent of total revenue. According to Joy’s report, this sets Fort St. John apart from all other municipalities.
Fort St. John’s liquidity ratio is above average and can pay its current liabilities 2.93 times over if a financial or other emergency or disaster occurs. In comparison, the average of other municipalities is 2.61. Joy’s report states anything 1.00 or less indicates cash flow problems.
Liquidity measures whether a municipality maintains enough cash to pay its bills or liabilities.
In terms of high debt service costs, the city is well below the 15 per cent threshold, with 5.46 per cent, yet is fifth highest of the 13 similar-sized municipalities and above the average of 3.2 per cent of other municipalities.
As of December 31st, 2022, Fort St. John had debt totalling $34,097,151, with only $9,829,917 of that debt affecting the tax rate in relation to the Pomeroy Sport Centre.
According to Joy’s report, the remaining $24,267,234 is recoverable through utility rates and local service debt payments from affected property owners. The future additional debt of approximately $17 million for the new RCMP detachment is fully recoverable through lease payments paid by the province.
The city’s infrastructure lifestyle ratio sits at 73.60 per cent, above the 61.81 per cent average of other municipalities. Joy’s report states the Peace River Agreement revenue and other capital grants have allowed the city to have a “robust” capital construction program.
Fort St. John’s capital investment ratio is the fourth highest of the comparable municipalities at 3.83 per cent. The average of other municipalities is 3.34 per cent. The report says this indicates the city is significantly increasing its assets and renewing its existing assets in a “planned and principled” way.
Although the city’s reserves ratio is the second-lowest of the 13 municipalities, Fort St. John is well above the threshold of 10 per cent or less of total expenditures. This is, again, a result of receiving $26 million in Peace River Agreement revenue, which finances the city’s short-term capital projects.
David’s report says high reserve balances indicate property owners might be over-taxed unless specific future capital projects are identified.
Chief Financial Officer Joy’s full presentation to city council can be viewed below: