MEDIA RELEASE #2
October 31, 2011
For Immediate Use
MAYORALTY CANDIDATE QUESTIONS COLDSTREAM MAYOR’S FINANCIAL LEADERSHIP
Coldstream Mayoralty candidate, Dave Hrabchuk, today questioned what the present Mayor is doing to create new enterprise and broaden the tax base in Coldstream.
“When you review the ten year financial record for the District you find that net assets have declined from $4.7 million to a negative $700 thousand,” said Hrabchuk, “that’s a drop in value of $5.4 million. And while our assets have been declining, debt has increased from $700 thousand in 2001 to $4.1 million in 2010.”
“Certainly we have new physical assets including the two fire-halls, but does the District have the ongoing cash flow to support the debt” asks Hrabchuk, “or will taxes have to be raised?”
There’s another oddity in the financial statements according to Hrabchuk. In 2001 with debt of just $700 thousand the District was repaying principal at the rate of $100 thousand per year. In 2010, with debt of $4.1 million, the District is only repaying debt at the rate of $200 thousand per year.
“How is this sound financial management,” ask Hrabchuk? Debt has increased almost 600% yet repayment of that debt has only doubled. Isn’t the District simply running the debt over a much longer period and wasting a substantial amount of money on additional interest payments?”
“And now the District is conducting a referendum asking residents if they’re prepared to borrow another $1.3 million to construct a new mechanics shop in the Works Yard which, if approved, would bring debt owing to $5.4 million, by far the largest debt the District has had in the past 10 years.”
“Do I think the District needs a new mechanics shop,” asked Hrabchuk? “ They could retrofit existing facilities, there are other options. Additionally, the environmental issues should be dealt with first so we can see how much that costs. Do I think this is the best time to be increasing debt, absolutely not,” he said.
“We need a revised financial plan that sees us paying off our debt as quickly as possible,” said Hrabchuk, “and I will make that a priority when elected”.
It appears that Mr Hrabchuk’s forte is indiscriminate criticism of the current Mayor. He does not offer anything of substance in return. However, in his haste to criticize he is making major mistakes. Just the last paragraph of his above release he promises major tax increases. Only an uninformed would suggest “...paying off our debt as quickly as possible”.
October 31, 2011
For Immediate Use
MAYORALTY CANDIDATE QUESTIONS COLDSTREAM MAYOR’S FINANCIAL LEADERSHIP
Coldstream Mayoralty candidate, Dave Hrabchuk, today questioned what the present Mayor is doing to create new enterprise and broaden the tax base in Coldstream.
“When you review the ten year financial record for the District you find that net assets have declined from $4.7 million to a negative $700 thousand,” said Hrabchuk, “that’s a drop in value of $5.4 million. And while our assets have been declining, debt has increased from $700 thousand in 2001 to $4.1 million in 2010.”
“Certainly we have new physical assets including the two fire-halls, but does the District have the ongoing cash flow to support the debt” asks Hrabchuk, “or will taxes have to be raised?”
There’s another oddity in the financial statements according to Hrabchuk. In 2001 with debt of just $700 thousand the District was repaying principal at the rate of $100 thousand per year. In 2010, with debt of $4.1 million, the District is only repaying debt at the rate of $200 thousand per year.
“How is this sound financial management,” ask Hrabchuk? Debt has increased almost 600% yet repayment of that debt has only doubled. Isn’t the District simply running the debt over a much longer period and wasting a substantial amount of money on additional interest payments?”
“And now the District is conducting a referendum asking residents if they’re prepared to borrow another $1.3 million to construct a new mechanics shop in the Works Yard which, if approved, would bring debt owing to $5.4 million, by far the largest debt the District has had in the past 10 years.”
“Do I think the District needs a new mechanics shop,” asked Hrabchuk? “ They could retrofit existing facilities, there are other options. Additionally, the environmental issues should be dealt with first so we can see how much that costs. Do I think this is the best time to be increasing debt, absolutely not,” he said.
“We need a revised financial plan that sees us paying off our debt as quickly as possible,” said Hrabchuk, “and I will make that a priority when elected”.
Response (Gyula)
It appears that Mr Hrabchuk’s forte is indiscriminate criticism of the current Mayor. He does not offer anything of substance in return. However, in his haste to criticize he is making major mistakes. Just the last paragraph of his above release he promises major tax increases. Only an uninformed would suggest “...paying off our debt as quickly as possible”.
The overwhelming majority of our debt is due to the taxpayer approved referendum for the construction of our fire halls. Those funds were borrowed from the Municipal Finance Authority at a predetermined rate for 20 years. We cannot actually repay the funds for at least 10 years as the bonds purchased by MFA are for 10 years. If we wanted to repay early we would have to increase taxes for 10 years to accumulate enough funds to be able to pay off the total debt at the end of 10 years. So, Mr Hrabchuk, how much would you be willing to increase taxes to speed up repaying our debt approved by taxpayers?
Comparing the 2001 Financial Statement to the 2010 is like comparing apples to oranges. The Public Sector Accounting Board (PSAB) ordered changes to the accounting standards by local governments three years ago and now we are using the Accrual method as opposed to the previous Cash method. I am not an accountant to adequately describe the differences but it appears Mr Hrabchuk is equally incompetent in this field. We now have to depreciate our assets yearly in the reporting. DCC’s which are actually reserves are now reported as liabilities until such time as they are used for projects.
Suffice to say Coldstream has one of the lowest tax rate and the lowest debt per capita as compared to similar sized communities in BC.
Indeed we have increased physical assets, such as College Way valued at about $9 million, various bike and walk ways, new lift stations, etc. We have value for our expenditures and the taxpayers of Coldstream should rest assured that their Council looked after the community well. No taxpayer funds were spent on structures only benefiting developers.
Anyone interested in further research could visit BC Municipal Spending Watch 2010.
Comparing the 2001 Financial Statement to the 2010 is like comparing apples to oranges. The Public Sector Accounting Board (PSAB) ordered changes to the accounting standards by local governments three years ago and now we are using the Accrual method as opposed to the previous Cash method. I am not an accountant to adequately describe the differences but it appears Mr Hrabchuk is equally incompetent in this field. We now have to depreciate our assets yearly in the reporting. DCC’s which are actually reserves are now reported as liabilities until such time as they are used for projects.
Suffice to say Coldstream has one of the lowest tax rate and the lowest debt per capita as compared to similar sized communities in BC.
Indeed we have increased physical assets, such as College Way valued at about $9 million, various bike and walk ways, new lift stations, etc. We have value for our expenditures and the taxpayers of Coldstream should rest assured that their Council looked after the community well. No taxpayer funds were spent on structures only benefiting developers.
Anyone interested in further research could visit BC Municipal Spending Watch 2010.
Providing facts is superior to innuendos and unfounded criticism. Below are a table from the above report demonstrating Coldstream's relative financial position and a table of Tax comparisons between communities in the Okanagan. Judge for yourself the health of Coldstream's finances.
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