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This article was published 16/5/2019 (382 days ago), so information in it may no longer be current.
The newly elected council of the Rural Municipality of Rossburn is facing critically empty coffers after an audit discovered they have been running a significant deficit since 2016.
Rumours got out there were substantial deficits and council believed the best way to get the word out and explain what was happening was by holding a special financial audit meeting at the end of April, Head of Council Kerry Lawless said.
"When we started getting the results in and looking at the books, we could see that there were substantial deficits," Lawless said. "We had to prepare them for some tax increases for 2019."
This step was taken because council wanted to give the public the opportunity to speak with the municipality’s auditor partner, Sensus Partnership of Chartered Accountants, while explaining what led to this situation.
The meeting drew about 150 people and was fairly reserved as most attendees were concerned with what happened and what steps the council would be taking to rectify the issue.
"There’s going to be some challenges with it, without a doubt," Lawless said.
In 2016, there was a deficit of nearly $332,000. In 2017, that number jumped to nearly $782,000.
The municipality is still awaiting information on the 2018 deficit, but Lawless anticipates it will be somewhere in the ballpark of $300,000.
The current council of Rossburn consists of Lawless, along with six new councillors. Twenty people ran in the 2018 municipal election.
There has been one turnover of a municipal staff member.
"They couldn’t hold us responsible," Lawless said.
This level of public office turnover is not typical in the area, Lawless said, but this was not a result of the deficit.
The newly elected council was voted into office in October and soon learned that audits were not done for 2016 and 2017 by previous council.
Manitoba municipalities are typically required to have audited financial statements for the previous year by June 20.
Rossburn council has asked the province for an extension of this year’s budget.
The reasons for the deficits are twofold— tax dollars collected dropped by more than 20 per cent in 2016 and a large amount of unbudgeted capital spending took place, Lawless said.
In an effort to combat the deficits, taxes in the municipality will likely be raised, but Lawless said it’s too early to set firm numbers.
"We’re certainly trying to keep it to a minimum, but we certainly can’t incur another deficit."
Generally, deficits are covered from the accumulated surplus fund or the general reserve fund in municipalities.
The municipality has asked for part of the 2017 deficit to be covered in this manner, but also asked to use a "recovery" where they tax residents over a certain number of years to cover the rest of the accumulated deficit.
If this request is approved by the province, there will be an increase next year to begin covering the recovery.
"We have to recover, and we basically have one form of revenue —and that’s basically property taxes," Lawless said. "That’s how it’s going to have to be made up."
As part of taking steps to address the deficit in Rossburn, council will be hosting public hearings for special service levies and their financial plan in the next four to six weeks.
Special service levies were introduced to help mitigate mill rates in the municipality post-amalgamation, and involved expenses for particular services being applied only to properties that receive that service.
The former council imposed the levies last year.
"It’s just a different way of applying (taxation)," Lawless said.
Council is also working on having a new budget planned out by the start of June.
"There will be an opportunity for the public to gather more information," Lawless said. "It’s a matter of hopefully communicating it properly."
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