August 4, 2026
Accumulated Surpluses and Reserves
Please read this BLOG first
BLOG: Surpluses and Transparency
Our 2025 property taxes had been set by the Town around January 2025 and were due to be paid by us fully in 2025.
In the winter 2024/2025 the Town set a budget for expenses and other revenue which was approved by the Mayor and Council. Our property taxes make up the gap between budgeted expenses and budgeted revenue. Property owners are the "plug" that balances the budget. We make the budgeted surplus equal to zero.
in June a surplus of $4.7 million was declared. There is no adjustment back to the property owners in the year. The Town has $4.7 million of your tax dollars that it did not need in the year. We tend to call this a good thing, well I will agree its better than a deficit.
So what happened to this $4.7 million surplus? It was added to previous year surpluses and resides in the Town financial statements as Accumulated Surpluses.
The following flowchart illustrates the travels of property taxes through surpluses into accumulated surplus and reserves.
A portion of this Accumulated Surplus has been defined as "Reserves" and at December 31 2025 it was $11.9 million. In the financial statements the Town describes this as "Reserves and reserve funds set aside for specific purposes by Council." You can think of these reserves as taxes which have already been paid. Of note is the $22.5 million of near cash the town has on hand.
Notes to the consolidated financial statements for the year ended December 31, 2025
Note 8. Reserves and reserve funds
Reserves and reserve funds set aside for specific purposes by Council
Accumulated surplus is the total amount by which an organization's lifetime revenues exceed its lifetime expenses, representing net financial and physical resources available for future services. It is commonly used in governments, municipalities, and non-profit groups.. The size of the accumulated reserve is not related to the availability of cash.
Points to Remember
1) Surpluses, which are in essence an advance payment of taxes, are added to accumulated surpluses.
2) A portion of accumulated surpluses are carved out by the Mayor and Council. This carve out has a number of descriptive names to the separate programs and is currently around $11.9 million.
3)Do not know if these individual programs have contractual commitments, do not know if projects have been approved by council. You can draw your own assumption from the project descriptions
4) These carve outs though as little understood as they are not necessarily contractual and can only be used if the Town had sufficient cash to execute on the programs. The Town has $22.5 million of near cash which may be sufficient to do a lot of these projects.
5) When the Mayor talks about "healthy reserves" he is referring to this pool of funds. This pool is from your taxes, your prepaid taxes. The word "healthy" is subjective here. I will take the Mayors word on it being healthy. My concerns are that it may be excessive and being used to fund minor projects with out appropriate oversite.
Every organization, if managed wisely, should have a pool of funding to smooth out hills and valleys of its cash flow. This can be a mixture of cash on hand or borrowing capacity like lines of credit or issuance of debt. It appears the Town has elected to build cash reserves. To determine if the cash reserves are appropriate you need to understand future cash flows. I assume the Town does perform cash flow projections going out a few years. I have not reviewed it.
