Woodlands County ends 2019 with a seven-figure deficit

During the Tuesday, March 3 Woodlands County council meeting, Director of Corporate Services Alicia Bourbeau presented council with a financial breakdown for 2019. The four-page document featured the budget summary showing what was budgeted for 2019, the actual costs, and how the county sat financially as of December 31, 2019.

There’s no easy way to say it. Woodlands County is sitting at a deficit of $1,467,032.91. However, this number is much lower than what the deficit could have been had administration not cut back through the later portion of 2019 as they worked to save what felt to some to be a sinking ship. Areas that saw cutbacks include equipment, general supplies, fuel, advertising, computer support, and building maintenance. One of the biggest cutbacks came through contracted services which saved just over $3.4 million.

As for personnel costs, the document showed that wages for county employees which totalled over $5.1 million were cut by nearly $140,000 and benefits were cut from $1,346,354 down to $1,060,141.84 which amounted to savings of just over $285,000. Honoraria also saw a cut from $531,789 down to $376,112.05 which saved the county just over $155,000. A few lines within the personnel area did see increases, however, including remuneration (+$68,537.28) and overtime (+$13,123.51) but a vast majority were significantly cut.

“I started out with a picture because potentially the rest of the news is not going to be as encouraging,” said Director Bourbeau as she handed out the package to each member of council and attending administration. The first page of the document showed a graph of the financials. “I wanted to give you the visual that administration took the financial concerns and took what council was saying and we did some very tough things.”

One of the lines in the statement where the cost was more than budgeted was Other Local Government and it came in at over $550,000 more than budgeted for. Director Bourbeau explained that there wasn’t enough left in payables at the end of 2018 to pay what was previously agreed to with the Town of Whitecourt through the inter-municipal cost-sharing agreement. This forced them to add the leftover amount to the 2019 financials. One of the areas that wasn’t budgeted for was Allowance for Doubtful Accounts which, had it been budgeted, could have helped with accounts that went unpaid. Only $5,500 was budgeted but the actual cost was just shy of $270,000.

In the end, the breakdown of financials sees more going out in terms of costs than the money coming in. Woodlands County received $29,391,092.28 in total revenue. However, this is where tax arrears owed to the county come into play. Not only is Woodlands County owed millions in property tax from two oil and gas businesses, one of which is still operational, but someone must pay the school taxes to the government. Since the companies aren’t paying it and they sit on Woodlands County land, that leaves the county to foot the bill until they receive the money from the businesses. That’s $5,531,301.46 lost from the county’s revenue in 2019 on top of the loss in property taxes that are unpaid which is another $4,802,587.83.

After doing the math, that leaves $19,055,702.99 left as county revenue for 2019. As good as that may sound, the county’s operating costs last year totalled $20,522,735.90 which means they spent more money than they brought in leaving Woodlands County in the red to the tune of $1,467,032.91.

“I will caution you, please do not panic at this point. There is still activity going on to collect on outstanding receivables. Of the two main players there is only one that is not operating any longer and the other company that is a significant portion of the $4.8 million, is still operating so we are still hopeful that those funds will come our way,” explained Director Bourbeau. Woodlands also has intentions to try and collect some of the school requisition funds they paid on behalf of the non-operational company.

Councillor Jim Rennie thanked administration for the financials presented as they were and asked if it would be possible to get the same type of layout featuring 2020 numbers. “I think it will really help us envision where we are heading.” Director Bourbeau said she would do so. The final statement on the matter of the financials came from Councillor Govenlock and he prefaced the statement by saying that what he was about to say was not a reflection of the skills of Director Bourbeau.

“The budgeted expenditures, had they been utilized, were projected at $26 million and had that line of spending not been addressed and interrupted in July instead of $1.5 million in arrears, we would have been six or seven million in arrears. So, the purpose of me identifying the issue is the preparation of the 2020 budget. At the last council meeting I mentioned that the budget for 2020 is a reflection of the 2019 budget, not the 2019 actuals and the problem is if we’re planning on spending for 2020 with the same mentality that we chose for 2019, we could end up being $7 million or more in deficits given what’s tracking right now. That’s why it was important for me to emphasize the possibility that we budget based on 2019 actuals and plan for 2020 in a much more fiscally restrained manner than what I saw approved two weeks ago.”

Following Councillor Govenlock’s statement, Mayor Burrows asked Director Bourbeau to clarify that council would be taking a pay cut from the 2019 levels. “The new fee structure was designed so there would be a reduction,” she said, adding that they would be comparing the actual costs and the budgeted costs very closely over the next few months as they get ready to prepare taxation notices to “ensure that we are on track.”

The bottom line is that Woodlands County is suffering right now. Thankfully, there is good amongst the bad. An unexpected boost in revenue brought in $1.3 million more than anticipated which means they could have been double the current deficit had that not been the case. Secondly, they were able to cut back their spending by $5.3 million halfway through 2019 which saved them from going at least that far further into debt. This easily could have been a debt of $8 million were it not for the extra revenue and decreased spending. That’s the good news. The bad news is that there is still a massive debt to recoup and until the companies that owe them pay it back or the government steps in to help, the county will continue to be in the red and require even more cuts to the budget.