Sudbury

'No specific concerns' about health of Sudbury's reserves: CAO

The city currently has $149 million set aside to cover unforeseen expenses.

Chief administrator says city has put aside the equivalent of $15 to repair a $100k house

Ed Archer, Sudbury's CAO, says he isn't concerned about the health of the city's reserve funds. (CBC)

Saving up to fix your city's infrastructure is like maintaining your house, says the City of Greater Sudbury's Chief Administrative Officer Ed Archer.

He adds that taking care of the little problems now can help relieve any financial pressures in the future.

His comments come after the city's roads department reported that it went $3.9 million over budget for snow removal, which emptied out that portion of the city's reserve funds.

The news drew some concern from Councillor Geoff McCausland, but Archer said it's no cause for alarm. 

"I'm always concerned about managing service commitments and our financial capacity," Archer said. "So we monitor that. But I have no specific concerns about the state of our reserves."

The city currently has $149 million set aside to cover unforeseen expenses, to "smooth the difference" between the annual budget and actual expenses. Different amounts are typically allocated to snow removal, insurance, and equipment replacement, among other items, Archer said.

The reserve fund gets replenished through tax revenue and injections from other levels of government.

But moving forward, the city's top administrator said he'd prefer if there was a bigger cushion set aside for a rainy day, especially as the city grapples with costs of maintaining an aging, crumbling infrastructure.

"If your house is worth $100,000, the equivalent value of the reserves that we would have on hand for our asset renewal would be in the $10 to $15 range," he said.

"And if there are surprises you've got relatively little room to manoeuvre," he added. "So you'll have to borrow to make those repairs or you'll have to rely on your annual income."

In a city's case, that would mean raising taxes to support extra work.

"You can decide that broken window on your house isn't going to get fixed or you can decide that door that sticks is going to keep sticking," Archer said. "And so you accept that doesn't work the way that it was originally set up to work."

"Cities can make those same kinds of choices."

As for choices made in the past, Archer said decisions by previous councils has helped the city maintain a solid credit rating, which can be useful if the city plans to borrow money to pay for large projects.

"The state of our reserves is relatively healthy," Archer said. "Our credit rating from Standard and Poor's is one of the highest."

"One of the factors Standard and Poor's considers is the health and capacity of our reserves to support service levels and other financing choices. So that we have a high credit rating is a signal that we are doing what we need to do with respect to planning for and managing our reserves."

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