By Greg Price
Barnwell village council got a look into its financials for the year that was in 2015, and comparative to like-sized communities, looks to be on some solid footing.
Accountant James Nakashima, a partner at YPM Chartered Accountants was on hand to present Barnwell’s financial statements for 2015 at council’s late-April meeting.
As of Dec. 31, 2015, Barnwell had financial assets which includes cash and receivables, of $1.3 million, which was a little higher than 2014. Total liabilities equaled $508,520. A net financial asset position for Barnwell entering 2016 was $979,138.
“That $979,000 is the net position the village has in funding its operations,” said Nakashima. “That is a surplus you can use for future purposes.”
Non-financial assets for Barnwell include capital assets totaling $7.798 million.
“That is roads and equipment, buildings and trucks and things like that,” said Nakashima.
In the statement of operations which breaks down the revenue and expenses for 2015, Barnwell received $461,000 for property taxes and $438,000 for user fees and sale of goods.
“Water sales and garbage were a little higher than we were budgeting for. Other revenues were pretty close,” said Nakashima.
Expenses were very close to what was budgeted with administration being $10,000 below budget. Total expenses totaled $1.04 million. It made for an excess of revenues over expenses when factoring in government funding for capital projects, of $278,000.
Included in the $278,000 is the amortization of assets. Amortization is an expense that reduces net excess of revenue over expenses, but doesn’t affect the financial assets because it has to do with technical capital assets.
“We are actually closer to $540,000 of financial assets that we generated through general operations. From that, we invested $349,000 into capital assets,” said Nakashima. “It is good to see that financial asset number going up. If the village takes out a big loan for a big capital project, that number will flip. For the time being, we are bumping up that number every year and last year we increased it by about $186,000, going up every year, that’s what you want to see.”
A new accounting principle was applied for contaminated sites liability.
“When there is air, water or soil contamination, the CA has set thresholds from the government that we have to record any liability the village may have,” said Nakashima. “It was a new policy that was put into place. But basically, there was no impact as a result of that policy. There were no contaminated sites, so there was no impact at this time.”
The Village of Barnwell has $424,000 of debt. Municipal Affairs has established guidelines of how much debt a municipality can carry effectively which is $1.5 million in which Nakashima assured Barnwell council should not be concerned at this point with the actual debt limit they are carrying.
“This is the debt from our water-treatment plant. I wasn’t on council (at the time), but this is probably over 20-25 years and coming on around 10 years (now),” said Barnwell Mayor Eric Jensen. “There’s interest on it, but the government rebates it accordingly. The last time I read it, I think we are paying like only four per cent, the government subsidy is pretty good there. Every payment we’re making, more and more is going to go towards the principle. We are making progress there.”
Village of Barnwell possesses $8.79 million of accumulated surplus. Of that, $741,000 is unrestricted. $695,000 is from reserves and $7.3 million is invested in capital assets.
Nakashima referenced charts that were indicators of financial conditions, using the process for the last couple of years. They included sustainability indicators where if there is an upward trend, it is a positive indicator.
“That means we are building up our assets apart from our liabilities. Since 2013 we are seeing that upward trend which is the way you want this,” said Nakashima, adding the trend of operating expenses to taxable assessment is also positive. “That line is fairly flat. If our expenses are going up faster than property values, that is a bad sign, but that line is fairly flat which is generally what you want to see.”
For network value to cost of capital assets, it gives an indicator of the age of the village’s capital assets.
“For 2015, there is about 28 per cent of the cost of the assets has been amortized. There is about 72 per cent of useful life left. The village has spent a lot of money in the last few years on capital projects. I think in the last five years, it’s been close to $2 million in new capital assets,” said Nakashima.
There was a comparison chart of Barnwell and three other like-sized municipalities which YPM does audits for in which Barnwell is on the higher end of four positive trend comparisons.