The municipality is in good financial shape, according to a University of B.C. accounting professor who reviewed the 2017 District of Squamish financial statements.
The Chief asked professor Kin Lo to analyze the 2016 consolidated financial statements and the District looks to be in a sound financial position, he said.
“What the financial statements show is an operating surplus that is quite sizeable and forecasted to continue [between] about 13 or 14 million dollars per year,” he said.
Though some may say that the District’s surplus is too plush and perhaps property taxes, which increased by an average of between 4.7 and 5.8 per cent this year, should be reduced, Lo said that wouldn’t necessarily be a smart move.
“That surplus is being used toward investing in infrastructure, capital expenditure items such as transportation, sewer, water and waste processing,” he noted.
“The surplus is needed to fund necessary infrastructure investments.”
In a sense, the District is a victim of its own success and recent growth, Lo suggested.
The population in Squamish increased close to 14 per cent from 2011 to 2016 and currently clocks in at close to 20,000.
“If the district were not growing so much or growing at all, the District would only need to invest in what was worn out over time,” Lo said.
“The fact that the district is growing means there needs to be additional sewers and water pipes and roads put in.”
The District’s public works department saw a 36 per cent increase in requests for service over 2015 for issues such as roads and drainage, utilities and parks in 2016, according to the District of Squamish Annual Report 2016 published this month.
To reduce taxes, the District could have borrowed more, he said.
Investments in infrastructure are funded approximately 60 per cent from surplus and about 40 per cent from borrowing in Squamish.
“Reducing taxes would mean that more needs to be borrowed to fund the infrastructure and there could be a good argument for that in that some portion of the investment is for future generations, so maybe the borrowing is appropriate for that because it is there to benefit a future tax payer and they should pay for the borrowing later,” he said.
While at the end of 2016 the debt the District was carrying was just under $24 million, roughly 40 per cent of that was for water and waste treatment. The rest was general borrowing.
That means the debt is approximately $1,200 per person in the district.
In comparison, the investment in financial assets that the District has is about $78 million.
“That exceeds the debt by a substantial margin and there is also a lot of tangible capital assets, the sewers, roads and buildings that adds up to roughly another $240 million.”
“Relative to the amount of assets in the District, the amount of debt is not that large.” Municipalities that have gone bankrupt, such as towns in Pennsylvania and the City of Detroit, had declined rapidly, Lo said.
“They borrowed either in anticipation of growth or a stable population and they thought they could continue to fund these debts, but when a town or city is in decline then the tax base starts eroding and the ability of the residents to support the municipal taxes and user fees declines, and so that was the cause of these jurisdictions going bankrupt.”
