It’s the kind of news that no politician wants to be delivering to the taxpayers, but when they drew the straws at city hall it fell to councillor Sheila Gordon-Payne to outline that the city had lost 5 million dollars from its budget due to an accounting error.
Ms. Gordon-Payne, who was holding the title of acting mayor this week while Mayor Herb Pond was out of town, was the bearer of the bad news at a press conference Thursday.
During that press conference, the city explained that it was a “logic error” that resulted in the five million dollars being counted twice, providing a rosier picture for city staff than what really is there.
The double count was discovered by the recently hired Christine Yew, the city’s manager of budgets and accounting who found the error during a routine process of balancing the books. Who no doubt has already passed her next seven years of evaluations with this one bit of forensic accounting work.
Due to the sudden decline of available cash the city has decided to cut $1.9 million in projects which they had hoped to finish by using matching grants, the city will not be paying back any of the money used from the reserve funds taken during the Skeena tax vacation years, which would have totaled 1.3 million this year, as well a number of other purchases have been cancelled or deferred until 2008.
The city was trying to put the best spin on the situation on Thursday, by issuing a press release that stated; no layoffs will take place and no negative property tax effects will be felt by the citizens of the city. Gordon-Payne explained that “This is not going to look good but it is not going to harm our financial situation.” “I view it as it puts us a year behind in our rebuilding”
Council and Mayor won’t be available to discuss the situation until the next council meeting after Thanksgiving, as they had a reduced work month in September with only one council meeting planned due to their upcoming trip to Vancouver and the annual UBCM meetings.
Perhaps they could host a symposium for their fellow municipal counterparts, a cautionary tale on financials somewhat along the lines of “You’re never as rich as you think you are”
The Daily news had all the details and the official story from city hall on the front page of Friday’s paper.
CITY LOSES $5M FROM BUDGET FOLLOWING ACCOUNTING ERROR
By Leanne Ritchie
The Daily News
Friday, September 21, 2007
Pages one and three
Ms. Gordon-Payne, who was holding the title of acting mayor this week while Mayor Herb Pond was out of town, was the bearer of the bad news at a press conference Thursday.
During that press conference, the city explained that it was a “logic error” that resulted in the five million dollars being counted twice, providing a rosier picture for city staff than what really is there.
The double count was discovered by the recently hired Christine Yew, the city’s manager of budgets and accounting who found the error during a routine process of balancing the books. Who no doubt has already passed her next seven years of evaluations with this one bit of forensic accounting work.
Due to the sudden decline of available cash the city has decided to cut $1.9 million in projects which they had hoped to finish by using matching grants, the city will not be paying back any of the money used from the reserve funds taken during the Skeena tax vacation years, which would have totaled 1.3 million this year, as well a number of other purchases have been cancelled or deferred until 2008.
The city was trying to put the best spin on the situation on Thursday, by issuing a press release that stated; no layoffs will take place and no negative property tax effects will be felt by the citizens of the city. Gordon-Payne explained that “This is not going to look good but it is not going to harm our financial situation.” “I view it as it puts us a year behind in our rebuilding”
Council and Mayor won’t be available to discuss the situation until the next council meeting after Thanksgiving, as they had a reduced work month in September with only one council meeting planned due to their upcoming trip to Vancouver and the annual UBCM meetings.
Perhaps they could host a symposium for their fellow municipal counterparts, a cautionary tale on financials somewhat along the lines of “You’re never as rich as you think you are”
The Daily news had all the details and the official story from city hall on the front page of Friday’s paper.
CITY LOSES $5M FROM BUDGET FOLLOWING ACCOUNTING ERROR
By Leanne Ritchie
The Daily News
Friday, September 21, 2007
Pages one and three
The city of Prince Rupert made a $5.1 million budgeting error and has had to cut its project list for 2007 in order to balance the books.
At a press conference on Thursday, city officials confirmed that, in the budget documents released in May, the utility revenues were counted twice, resulting in revenues being over estimated by $5.1 million.
"Through the usual budget process, as staff was preparing their budget report for October, it was discovered that there was a $5.1 million error in the budget we prepared," said acting mayor Sheila Gordon-Payne.
"Clearly, this comes as a blow to council and staff. That being said, it is important to keep this in context. This is a budgeting error that was caught in a timely manner through routine checks and balances. The management team has already implemented a plan to address the problem. We will finish the year with a balanced budget."
City staff have gone through their departments and cut $1.9 million in projects it had hoped to complete using matching grants. In addition, the city will not be paying back any of the money it used from the reserve funds during those years it was spending, but not actually receiving, Skeena Cellulose pulp mill taxes. The city had planned to put back $1.3 million this year. Other purchases such as new technology have also been cancelled or deferred until 2008.
On the other hand, neither the city's unions nor the taxpayers will feel any direct impact, said officials.
"There will be no need for layoffs and no negative property tax effect on the citizens of Prince Rupert," said Gordon-Payne.
Christine Yew, the city's manager of budgets and accounting, located the error. Yew was recently hired by the city and she found the mistake during a routine process of balancing the books.
Dan Rodin, the city's new chief financial officer, described the mistake as a "logic error," an error in the numbers initially used to create the budget. He said it was the type of mistake that is very difficult to spot once a budget is in place and they were fortunate Yew found the error so early in the city's financial year.
"When you are putting together a budget, you can have two types of errors. You can have mathematical errors, where something simply doesn't add right, or you can put things together in a way that isn't logical," said Rodin.
"The first type of error is pretty easy to figure out ... but when you have a logic error, once you are heading down that track, often people will look at it and go 'that makes sense' because it is already in front of them and they are not going through that act of creation again."
Council will implement a 2007 financial plan bylaw amendment at their October meeting to ensure a balanced budget while maintaining all city services and competing all planned essential public works.
"This is not going to look good but it is not going to harm our financial situation," said Gordon-Payne.
"I view it as it puts us a year behind in our rebuilding. Certainly, the town is looking better and we thought we would continue with quite a momentum this year - we took two steps forward, now we are a step back."
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