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RFD- 4019 Administrative Updates   Item #   9. b.    
Regular Council Meeting Agenda
Meeting Date: 08/17/2020  
Title:    2020 Second Quarter Financial Statements - Frostad
Department: Corporate Services  
Strategic Vision Element: This topic relates to all three of the City’s strategic vision elements contained in Council’s Strategic Plan Related Goal: n/a

Information
Request for Decision Summary

To publish quarterly financial information to allow the routine monitoring of financial activities.


Proposed Motion
That the 2020 second quarter financial statements be received as information.

Background/Analysis
The financial statements have been prepared and presented by Administration, who is responsible for their accuracy, objectivity, and completeness.  Administration is available to provide Council with an overview and answer any questions about the financial statements.

Interim financial statements are consistent with annual statements except that they are condensed, unconsolidated, and unaudited.
  • Condensed financial statements do not include the complete note disclosure, but refer readers to the annual financial statements.
  • Unconsolidated financial statements do not include the financial results of the TransAlta Tri Leisure Centre or the Library.
  • Interim financial statements are not normally audited.
The financial statements represent the financial position of the City at June 30, 2020, as well as the results of its financial operations, changes in net debt, and changes in cash flows for the six months ended June 30, 2020. 

Quarterly financial statements include year-to-date budgets, which are helpful in comparing planned and actual results during the fiscal year.  Some budget variances are due to timing differences in the year-to-date budget.  Administration continues to work on making the year-to-date budgets as accurate as the annual budget.

Highlights from the Q2-2020 financial statements:
  • The City's net debt position improved since year-end and the prior quarter end.  The City ended the quarter in a net debt position of $6.5 million, as compared to $8.6 million at the end of the prior quarter.  After spring budget adjustments, the City is projecting to be in a net debt position of $27 million at the end of 2020.
  • Financial assets are typically higher at the end of June as property tax payments are due June 30th.  Due to the COVID-19 pandemic, a tax deferral program was initiated and the payment deadline was extended to September 30th to assist residents in paying their property taxes in the current year.  The uptake in the deferral program was less than anticipated and the increase in property taxes receivable is only slightly higher than it was at the end of the prior quarter. 
  • Although liabilities increased since year end they decreased from the prior quarter end.  The increase from year end typically results from tax requisitions owing to Alberta Education, Evergreen Catholic Schools, and the Meridian Foundation on property taxes collected.  Tax requisitions are typically paid out in the third and fourth quarters.  Payables were lower than the prior quarter end as the City paid out the holdbacks on the Protective Services Facility and the RCMP Facility.  
  • Also important to note is the decrease in the liability for contaminated sites.  The liability decreased from year end as costs were incurred to update the risk management plan to reflect remediation work performed.  There was also some work done to prepare for groundwater monitoring scheduled to take place later in the year. 
  • Operating revenues were comparable to the prior quarter end but slightly under budget.  The biggest contributors to the variance from budget were fines revenue and user fees.  Photo enforcement fines were down as service was reduced during the pandemic.  User fees were also down as a result of the pandemic as the City experienced a reduction in revenues associated with transit, ambulance, Horizon stage programs and other cultural events, program registrations, and developer fees.
  • Operating expenses were also comparable to the prior quarter end but came in under budget, as spending was minimized to allow the City to operate in a new environment as a result of the COVID-19 pandemic.  Two areas where larger variances from budget were identified were salaries, wages and benefits and contracted and general services.  Salaries, wages and benefits were lower than budget as merit pay was deferred for the first 6 months of the year, and hiring freezes and temporary layoffs were instituted.  Contracted and general services also came in under budget as information systems project spending was halted as the implementation of remote access solutions became a higher priority.  Photo enforcement contract expenses declined consistent with the trend in revenues, and repairs and maintenance expenses were also lower than planned.  
  • Capital revenues came in significantly under budget due to the deferral of capital projects planned for the first half of 2020.  The City deferred capital project spending as it attempted to minimize spending to deal with the COVID-19 pandemic.  Two major capital projects deferred were the Westwind land purchases and the transit permanent park and ride.  The deferral of these capital projects resulted in government transfers for capital coming in much lower than planned as the projects were primarily funded by Municipal Sustainability Initiative grants.
Options/Alternatives
n/a
Consultation/Engagement
n/a
Implementation/Communication
The interim financial statements have been posted on the City website and a copy has been discussed and distributed to the City's management team.
Impacts
n/a

Fiscal Impact
Financial Implications:
N/A
Attachments
June 2020 Unconsolidated Financial Statements

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