SPC reviews reserve numbers

By Al Beeber - Lethbridge Herald on March 6, 2025.

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

Darrell Mathews, the City of Lethbridge’s Chief Financial Officer and Treasurer, on Wednesday detailed the City of Lethbridge’s preferred figures for financial reserves to the Audit Standing Policy Committee of city council.

In his presentation in council chambers, Mathews addressed proposed amendments to the City’s Financial Reserves policy CC65, that include optimal balanced targets for the Municipal Revenue Stabilization Reserves (MRSR) as well as the Major Capital Project and Fleet reserves.

The amendments also introduce a new Waste Utility Reserve, which is aimed at funding infrastructure renewal and expansion.

The committee unanimously voted to recommend that council adopt the amended policy to include the creation of the Waste Utility Reserve.

“Healthy reserves result from effective long-term financial planning to determine the optimal balance for a specific reserve, ” says a report submitted to the SPC by Mathews.

Council on Jan.25 approved an official business motion that directed City administration to recommend an optimal balance for the MRSR to ensure it’s serving the purpose for which it is intended and that this optimal figure be included with a review of policy CC65.

“A reserve policy provides consistent guidelines and standards for the management of existing reserves and the establishment of new reserves. Financial reserves provide protection from financial risk and are used to accumulate funds over time to acquire or replace capital assets, or to fund one-time operating costs. They also provide a measure of financial flexibility to react to budget shortfalls or the financial impact of significant unexpected issues in a timely manner. Reserves are established based on city council direction and these funds can only be used for prescribed purposes,” says the report.

The Fleet Reserve, says the CFO, should be set at a range between $6.5-$12 million, the preferred balance being between eight and 15 per cent of the present replacement value of the corporate fleet portfolio.

Mathews is recommending that the MRSR balance after commitments should be five per cent of the operating budget. That means a reserve of $14 million.

He is also recommending a Major Capital Projects Reserve of $7.6 million – the minimum balance to equal the debt payments required for one year funding from the City’s Pay-As-You Go program.

The Audit Standing Policy Committee consists of councillors Rajko Dodic, Ryan Parker, Deputy Mayor Nick Paladino and Acting Mayor Jeff Carlson.