A new policy for taking money out of Town reserves doesn’t go far enough say some Okotoks councilors.

As part of an ongoing review of its policies, the Town of Okotoks has drawn up a new policy for the use of its reserve funds.

Town council took just over $1 million out of its operating reserves in its 2010 operating budget. Councillors Naydene Lewis and Stephen Clark voted against the budget last week over concerns about the withdrawal.

Under the new policy, the reserves can be used to maintain services, enhance the Town’s financial position and provide flexibility to meet changing economic conditions.

The Town did not previously have a policy regulating the use of its reserve funds, instead there was a set of established practices. The new regulations essentially now put these practices into writing.

The policy was drawn up, in part, after an inquiry by coun. Stephen Clark during recent budget meetings.

Clark said the policy is a step forward, but would like to see more concrete rules on what reserve funds can be used for.

“I’d like to see something stronger so we have a better understanding for what reserves are designed for and not continue on an ad hoc manner,” he said.

Clark said council needs to sit down and discuss where the lines need to be drawn.

Lewis said reserves should be used for unexpected situations, such as snow removal or emergency equipment replacements.

“It’s wise, very wise, to save for situations that come up, situations that you have no control over,” she said.

Lewis believes there should also be limits on how much can be put into, and taken out of, the reserves.

She argues the Town should place more emphasis on saving for future capital expenses.

The Town has built a lot of new infrastructure in the last five years that Lewis said could all end up requiring significant lifecycle maintenance around the same time in the future.

Councillor Beth Kish said the way reserve fund spending has been handled is appropriate.

“Its purpose is to maintain financial viability so we can provide high quality municipal services,” said Kish, who is also the head of council’s budget and finance committee.

Thanks to the reserves, Kish said town council was able to keep the tax rate lower and lessen the financial hit on homeowners.

“Of all the years to have a lower tax rate, this is the year when people need a break,” she said.

She said they also allowed the Town to hire five firefighters and take a shorter-term loan for the 32 Street bridge.

Louise Wasylenko, Okotoks financial services manager, said the new policy will apply to operating and capital reserves.

The bulk of the Town’s capital reserves are set aside for future maintenance of major infrastructure, with other funds for future infrastructure projects such as recreation facilities.

The town has about a number of different reserves for a variety of reasons such as snow removal or maintenance.

One of the most important reserve funds was put in place to ease the blow to the Town’s finances from the transition to paying 90 per cent of the cost for RCMP. The Town’s share of the policing tab rose from 70 per cent after Okotoks’ population passed 15,000.

The Town also has two reserves intended for maintenance expenses for the towns water infrastructure. As part of its agreement with the Foothills Centennial Centre board, the Town also sets aside funds for maintenance in the building.

By the end of 2008, the balance of the Town’s operating reserves was $2.6 million and she is projecting their balance at the end of 2010 to be approximately $1.5 million.

Wasylenko said the Town has been working on “cleaning up” old reserve funds that have sat unused. Once complete, the Town will have 24 operating reserve funds on its books.

According to Wasylenko, about 15 funds have been, or will be, closed and rolled into other funds.

She said one such fund – the riverside concert reserve – had a balance of $66. The money in the account was actually collected after an event where someone passed a hat around to collect donations to create seed money for new outdoor concert amenities.

“That’s all they got and they went ahead and set up a reserve,” said Wasylenko.

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