Wednesday, February 7, 2007 · Page 6 Town's debt burden high risk, says province BY ANDY COMBER High debt burden and high debt charges combined to result in a high risk level for the Town of Essex, according to the provincial 2006 Financial Indicator Review. "Significantly high debt load should be explored further," the review, which is forwarded to each municipality from the Ministry of unicipal Affairs and ousing (MMAH), notes. The ministry conducts an nnual review of the finanial information returns and inancial statements submited by municipalities. Using everal key financial indicaors, municipal financial erformance is assessed in elation to established rovincial thresholds to prouce a financial review for ach municipality. Both debt burden and ebt charges must be high in order to result in a high risk level for the total debt burden. For the Town of Essex, total debt burden per household was recorded as $2,859 for 2005, significantly higher than the provincial average of $533 for that year. The MMAH considers any amount over $1000 as a high-risk level. The town's own purpose debt charges, as a percentage of municipal operating expenditures, improved to 12.85 percent in 2005, from 13.13 percent in 2004, but still exceeded the MMAH's threshold of 10 percent. Town Treasurer Donna Hunter expressed concerns over how the ministry reports numbers on a per household basis in the financial review. "Their household numbers include close to 50 percent of the town's debt that is not financed by the general population," said Hunter, speaking of the methods used in determining total debt per household. The MMAH took the town's total long-term debt just over $24 million and divided it by the number of residential households in the town, which was 8,445 in 2005. "We have so many components of debt," said Hunter, who created a report of the debt figures for council in response to the review. In her summary, Hunter divided the town's total long-term debt into categories: debt supported by taxation, debt-supported user rates, such as those related to water and sewage upgrades, and debt supported by other means, such as development charges. "People need to understand that we are working to reduce the debt," said Hunter, who feels that only debt supported by taxation, just over $3.7 million in 2005, should have been used to calculate the debt load per household. That would work out to about $448 per household, she said. About 49 percent of the town's debt in 2005 was supported by development charges benefiting property owners, including charges related to water, sewage, drainage and streetlight projects. Hunter acknowledged that all the municipalities are subject to the same calculations by the MMAH. However, she noted that many municipalities have not yet faced the major cost of water and sewage upgrades, and the need for lifecycle reserves. Over 35 percent of the town's total debt is supported by water and sewage rates. The town will have to address the shortfall of development charges, especially over the last year. According to Hunter, the equivalent of 80 homes, 10 townhouses, four apartments and 35,000 square feet of non-residential development is needed each year to support the town's sewage treatment expansions. Developments in the municipality are not expected to exceed 30 for 2006. Total debt burden for Essex in 2005 increased $357 per household from 2004 levels, and $987 from 2003 to 2005 levels. Average total debt burden per household for municipalities across the province was $533, up $98 from 2004. Total reserves and discretionary reserve fund per household were assessed at a low risk level at $1,111 for 2004, close to the provincial average of $1,024. Want one good reason to teach with MYC? Here are 27: 1980-2007 The high note in music learningTM www.myc.com To learn more, contact your local MYC coordinator: Sandra Poolton, BA, RMT (EC), Certified MYC® Coordinator | Southern Ontario s.poolton@sympatico.ca Toll Free: 1.866.884.3080 Minimum requirements: GRADE VIII PIANO * GRADE II THEORY EXPERIENCE WORKING WITH CHILDREN For 27 years, Music for Young Children® (MYC®) has been one of the world's leading music-learning systems - and an excellent career choice for aspiring musicians who want to earn a living and build a reputation as music teachers. For your local weather forecast log on to ...