Regina Does Well in Financial Disclosure

Frontier Centre, Local Government, Media Appearances, Role of Government, Saskatchewan, Taxation, Uncategorized

The author of a new report says the City of Regina is doing a good job of disclosing its financial performance with the exception that it does not account for its capital assets.

The second annual Local Government Performance Index reveals that all 79 municipalities surveyed have a long way to go if they wish to approach the level of accountability practised internationally, said David Seymour with the Frontier Centre for Public Policy.

“In terms of accounting for capital assets — that is everything that the city owns — all municipalities we surveyed have their work cut out for them if they want to approach international standards,” Seymour said.

The Public Sector Accounting Board, he added, has mandated that municipalities must report the value of their capital assets on their balance sheets by next year.

“This year’s report show that for 2006 and 2007, only roughly half the municipalities surveyed have reached this standard,” he said, noting neither Regina nor Saskatoon include capital assets as part of its financial reports.

“We know from the other cities in British Columbia and Alberta and Montreal that actually do have capital assets on their balance sheets, that the average Canadian municipality manages about $15,000 worth of capital assets per household.

“If you think about that, there would be a lot of households in Regina who are renters with a cheap car that don’t have a lot of equity. So the City of Regina like most municipalities is managing just massive assets on behalf of the residents and that doesn’t even appear on the balance sheets.

“The current approach is to basically not integrate your core business, which is maintaining infrastructure, into your accounting standards. And that is a huge failing that has gone on for too long.”

Seymour compared the problem to buying a car for $20,000 and 20 years later when it is all beaten up still pretending it is a brand new car. By failing to account for billions of dollars in infrastructure and the depreciation of those assets the city is effectively not planning for the future capital outlay to replace the aging infrastructure.

“We have heard various things from the Federation of Canadian Municipalities and the Big City Mayors identifying what they believe the infrastructure deficit is. The reality is I don’t think they know and so it is absolutely essential that we start making this sort of thing accountable,” Seymour said.

Mayor Pat Fiacco was out of the country and unavailable for comment, and a city spokesman said no one from the city’s finance department was available for comment.

“Looking at the Regina results there is not a lot that you can be hugely upset about,” Seymour said.

“The spending and taxes are lower than the average on the prairies and the financial position — the assets and liabilities are also both low — so they have not invested much as they only have 20 per cent of the long-term debt of most municipalities.”

He added the city is spending more on core services like roads, water and sewer than on non-core services such as recreational facilities.

Seymour also gave good marks to the city in terms of its standards of financial reporting, disclosure and accountability compared to other cities. “Regina is a reasonably accountable city in terms of its annual report compared to other Canadian cities,” he said.