HomeMy WebLinkAbout2018 Annual Report - long versionFOR THE YEAR ENDING DECEMBER 31, 2018
COUNTY OF NEWELL, ALBERTA, CANADA
2018 ANNUAL FINANCIAL REPORT
Photo by M. Harbicht
County of Newell, Alberta, Canada2018 ANNUAL FINANCIAL REPORT
For the fiscal period ending December 31, 2018
Produced by the Finance Department in cooperation with all County departments
For information on programs and services, or to obtain a copy of this document, contact:
ADMINISTRATIONTelephone: 403-362-3266
E-Mail: administration@newellmail.ca
The 2018 Annual Financial Report is available online at www.countyofnewell.ab.ca
Cover Photo by M. Harbicht
Page 2
Photo by S. Stanway (Brooks Bulletin)
Page 3County of Newell - 2018 Annual Financial Report
TABLE OF CONTENTS
SECTION 1
Introduction
Vision, Mission, & Guiding Principles 7
County Profile 8
County Council 9
Organizational Chart 10
GFOA Canadian Award for Financial Reporting 11
Report from the Manager of Finance 12
SECTION 2Consolidated Financial Statements
Management’s Responsibility for the Consolidated Financial Statements 27
Independent Auditors’ Report 28
Consolidated Statement of Financial Position 30
Consolidated Statement of Financial Activities 31
Consolidated Statement of Change in Net Financial Assets 32
Consolidated Statement of Cash Flows 33
Notes to Consolidated Financial Statements 34
Schedule of Segmented Disclosures 49
SECTION 3
Financial & Statistical Section
Demographics & Other Statistics 52
Expenses by Object 53
Expenses by Function 54
Revenues by Source 55
Page 4
Photo by County of Newell Agricultural Services Department
Page 5County of Newell - 2018 Annual Financial Report
section 1
THE COUNTY OF NEWELL
Page 6
Photo by M. Harbicht
Page 7County of Newell - 2018 Annual Financial Report
VISION & MISSION STATEMENT
VISION STATEMENT
To encourage and support sustainable growth and quality of life.
MISSION STATEMENT
The County of Newell
through leadership and policy
provides services, structure and stability.
GUIDING PRINCIPLES
Seeking cooperation with individuals, governments, and organizations
Planning for the future growth and development of the municipality
Striving for the long-term financial stability of the municipality
Supporting the development and sustainability of a strong infrastructure
Providing services in a consistent and efficient manner
Preserving land for agricultural use
Promoting open communication between staff, Council and the public
County of Newell - 2018 Annual Financial ReportPage 8
COUNTY PROFILE
The County of Newell is a rural municipality located
central to Calgary, Medicine Hat and Lethbridge
with less than 190 kilometers of separation
between each city. The County is a growing
transportation hub with the TransCanada Highway
#1 and Highway #36 intersecting within our
boundaries. CP Rail’s mainline runs through the
County, on its track from Montreal to Vancouver.
Our geographical position provides ease of access
to the oil sands to the north and the United States
to the south, creating an ideal trade location for
businesses.
The population of the Newell region, inclusive
of our urban counterparts, is over 24,000. The
largest urban communities in the region are the
City of Brooks and the Town of Bassano. The
County has a positive working relationship with
our urban neighbors, which improves the quality
of services provided to all of our residents.
The County is home to the Eastern Irrigation
District (EID) which provides an extensive water
supply, storage, and drainage network throughout
the region. Water diverted from the Bow River at
the Bassano Dam provides for irrigated agriculture,
industrial, household and livestock use, as well as
many recreational opportunities and enhanced
environmental conditions.
The County has a dynamic and diverse economy
driven by three pillars: Agriculture; Oil and Gas;
and Tourism. There are approximately 500
primary agricultural producers in the County, and
approximately 1,500 non-agricultural business
enterprises within the County and its municipalities.
The region boasts extraordinary crop quality with
over 300,000 acres of irrigated farmland, 600,000
acres of cultivated dry land farming and 600,000
acres of native and improved rangeland. With a
younger work force and average farm receipts in
the range of $100,000 to $249,999, the region is
home to some of the most profitable farmers in
Alberta.
The County has one of Alberta’s most active
natural gas fields. There are roughly 30,000
wells in the County, which accounts for half of all
wells in Alberta, and 37% of all wells in Canada.
Approximately 170 production and service
companies employ 4,000 to 5,000 people in the
energy sector in the region.
Key tourism anchors include Lake Newell - one
of Canada’s largest man-made lakes, Dinosaur
Provincial Park - a UNESCO World Heritage
Site, and recreation activity as diverse as golfing,
boating, camping, fishing, hunting, and wildlife
watching.
Population (2016): 7,524 Increase in population (2011 to 2016): 5.4%Median Age: 38
Unemployment rate: 7.1%Median Household Income (2015): $90,880 Number of Farms: 668
2019 Final Budget 5
Agriculture
Oil & Gas
Tourism
COUNTY PROFILE
Population (2016): 7,524 Increase in population (2011 to 2016): 5.4% Median Age: 38
Unemployment rate: 7.1% Median Household Income (2015): $90,880 Number of Farms: 668
The County of Newell is a rural municipality located
central to Calgary, Medicine Hat and Lethbridge with
less than 190 kilometers of separation between each
city. The County is a growing transportation hub with
the TransCanada Highway #1 and Highway #36
intersecting within our boundaries. CP Rail’s
mainline runs through the County, on its track from
Montreal to Vancouver. Our geographical position
provides ease of access to the oil sands to the north
and the United States to the south, creating an ideal
trade location for businesses.
The population of the Newell region, inclusive of our
urban counterparts, is over 24,000. The largest
urban communities in the region are the City of
Brooks and the Town of Bassano. The County has a
positive working relationship with our urban
neighbors, which improves the quality of services
provided to all of our residents.
The County is home to the Eastern Irrigation District
(EID) which provides an extensive water supply,
storage, and drainage network throughout the
region. Water diverted from the Bow River at the
Bassano Dam provides for irrigated agriculture,
industrial, household and livestock use, as well as
many recreational opportunities and enhanced
environmental conditions.
The County has a dynamic and diverse economy
driven by three pillars: Agriculture; Oil and Gas; and
Tourism. There are approximately 500 primary
agricultural producers in the County, and
approximately 1,500 non-agricultural business
enterprises within the County and its municipalities.
The region boasts extraordinary crop quality with
over 300,000 acres of irrigated farmland, 600,000
acres of cultivated dry land farming and 600,000
acres of native and improved rangeland. With a
younger work force and average farm receipts in the
range of $100,000 to $249,999, the region is home
to some of the most profitable farmers in Alberta.
The County has one of Alberta’s most active natural
gas fields. There are roughly 30,000 wells in the
County, which accounts for half of all wells in
Alberta, and 37% of all wells in Canada.
Approximately 170 production and service
companies employ 4,000 to 5,000 people in the
energy sector in the region.
Key tourism anchors include Lake Newell - one of
Canada's largest man-made lakes, Dinosaur
Provincial Park - a UNESCO World Heritage Site, and
recreation activity as diverse as golfing, boating,
camping, fishing, hunting, and wildlife watching.
County of Newell - 2018 Annual Financial Report Page 9
COUNTY COUNCIL
Clarence Amulung
(403) 793-3813
amulungc@newellmail.caDIVISION 1Rolling HillsCouncillor Wayne Hammergren
(403) 501-8909
hammergrenw@newellmail.caDIVISION 4Rainier/Scandia/Bow CityCouncillor Tracy Fyfe
(403) 793-2076
fyfet@newellmail.caDIVISION 5Cassils/Lake Newell Resort Councillor Huby Kallen
(403) 362-1777
kallenh@newellmail.caDIVISION 2Tilley Councillor Anne Marie Philipsen
(403) 793-0574
philipsena@newellmail.caDIVISION 3Patricia/MillicentCouncillor Kelly Christman
(403) 641-2274
christmank@newellmail.caDIVISION 6BassanoCouncillor Ellen Unruh
(403) 793-3369
unruhe@newellmail.caDIVISION 7RosemaryCouncillor Brian de Jong
(403) 501-8378
dejongb@newellmail.caDIVISION 8DuchessReeve Molly Douglass
(403) 363-9203
douglassm@newellmail.caDIVISION 9GemCouncillor Lionel Juss
(403) 362-0947
jussl@newellmail.caDIVISION 10Brooks
County of Newell - 2018 Annual Financial ReportPage 10
ORGANIZATIONAL CHART
REEVE
&
COUNCIL
CHIEF
ADMINISTRATIVE
OFFICER
EXECUTIVE
ASSISTANT
MANAGER OF
OPERATIONS
MANAGER OF
AGRICULTURAL
SERVICES
MUNICIPAL
ENFORCEMENT
SUPERVISOR
MANAGER OF
ENGINEERING
SERVICES
DIRECTOR OF
AGRICULTURAL
SERVICES
DIRECTOR OF
INFORMATION
& TECHNOLOGY
DIRECTOR OF
MUNICIPAL
SERVICES
DIRECTOR OF
CORPORATE
SERVICES
MANAGER OF
PLANNING &
DEVELOPMENT
MANAGER OF
CORPORATE
SAFETY
SERVICES
MANAGER OF
FIRE &
EMERGENCY
SERVICES MANAGER OF
FINANCE
FLEET
SERVICES
SUPERVISOR
County of Newell - 2018 Annual Financial Report Page 11
GFOA CANADIAN AWARD FOR FINANCIAL REPORTING
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Canadian Award for Financial Reporting to the County of Newell for its annual financial report for the
fiscal year ended December 31, 2017. The Canadian Award for Financial Reporting program was
established to encourage municipal governments throughout Canada to publish high quality financial
reports and to provide peer recognition and technical guidance for officials preparing these reports.
In order to be awarded a Canadian Award for Financial Reporting, a government unit must publish an
easily readable and efficiently organized annual financial report, whose contents conform to program
standards. Such reports should go beyond the minimum requirements of generally accepted accounting
principles and demonstrate an effort to clearly communicate the municipal government’s financial
picture, enhance an understanding of financial reporting by municipal governments, and address user
needs.
A Canadian Award for Financial Reporting is valid for a period of one year only. We believe our current
report continues to conform to the Canadian Award for Financial Reporting program requirements, and
we are submitting it to GFOA.
County of Newell - 2018 Annual Financial ReportPage 12
REPORT FROM THE MANAGER OF FINANCE
Introduction
The annual financial report provides readers with an opportunity to assess the County’s financial
activities and available resources. It also provides an opportunity to analyze and comment on the
principal features of the financial information contained in the 2018 audited Consolidated Financial
Statements and to highlight key financial results that occurred during the year. Management at the
County of Newell is responsible for the information contained in the annual financial report.
Photo by S. Stanway (Brooks Bulletin)
County of Newell - 2018 Annual Financial Report Page 13
REPORT FROM THE MANAGER OF FINANCE
2018 Financial Highlights
Consolidated Statement of Financial Position
The County improved its already strong financial position in 2018. Financial assets increased by $6.7
million while liabilities decreased by $4.0 million resulting in an overall increase in net financial assets of
$10.7 million. Non-financial assets, which consist primarily of tangible capital assets and inventory for
consumption, decreased by $2.1 million. The changes in net financial assets and non-financial assets
result in a net increase in accumulated surplus of $8.7 million for 2018.
Consolidated Statement of Financial Activities
Revenues were $2.2 million lower than budgeted or 94.8% of budgeted revenues. This is largely due to local improvement taxes which were budgeted but not recognized as the related project is still in the planning stages. Revenue increases over prior year amounts were driven by raising additional property tax revenues and increased well-drilling activity in the region which drove higher well-drilling tax revenues.
Expenses were $2.8 million lower than budgeted or 90.05% of budgeted expenses. Staffing costs were under budget due to lower than expected training expenses across all departments, lower overtime costs in the Municipal Services and Agricultural Services departments and staff vacancies which were not filled during the year. Contracted services were under budget primarily due to lower than expected repairs and maintenance on roads and buildings, as well as unfinished intermunicipal collaboration and gravel exploration projects. Materials, goods, supplies and utilities were under budget primarily due to deferring the purchase of AFFRC’s radios, lower than expected repairs and maintenance costs on vehicles and equipment, and less use of road maintenance materials such as gravel and calcium.
The County transferred $6.3 million to the Province for paving projects on highways 873, 525 and 876.
The County ended the year with an Annual Surplus of $8.7 million.
Consolidated Statement of Change in Net Financial Assets
Net financial assets increased by $10.7 million, for a total of $76.9 million in net financial assets at the
end of the year. This indicates the County can afford to settle its liabilities.
Consolidated Statement of Cash Flows
Cash and cash equivalents increased by $700 thousand in 2018. Operations provided cash of $18.7
million, $3.8 million was used to purchase tangible capital assets, $8.3 million was used in investing
activities and $5.9 million was used to repay long term debt.
County of Newell - 2018 Annual Financial ReportPage 14
REPORT FROM THE MANAGER OF FINANCE
MANAGEMENT REPORTING & CONTROL
The major components of the County’s financial management and control programs include the budget
process, accounting procedures, external audit, and various policies which are described below.
Budget Process
On an annual basis, Council considers a proposed operating budget and a ten-year capital forecast and
adopts the operating and capital budgets for the coming year. The budget process involves council,
department heads, staff and the public. Council approves the budget taking into account current
economic conditions, provincial policy changes and service needs within the County. It should be noted
that under provincial legislation sufficient revenues must be raised to meet all budgeted expenditures.
After the budget is adopted by Council, expenditures are controlled against budget by formal policies
and financial systems designed specifically to prevent budget overruns.
Accounting Procedures
The County’s accounting system and related internal controls are designed to provide reasonable
assurance that financial records are complete and accurate and that assets are safeguarded against
loss from unauthorized use or disposition. The County’s Purchasing and Budget Variance policies
ensure that controls and reporting requirements are appropriate. Generally accepted accounting
principles for local governments are adhered to.
External Audit
Council is required by the Municipal Government Act to engage independent auditors to express an
opinion as to whether the County’s financial statements present fairly, in all material respects, the
County’s operating results and financial position. The auditors have full and free access to all County
records and they meet periodically with staff to discuss matters arising from the audit or from new
policies and procedures. The auditors also provide the County with a management letter providing
comments on internal controls.
While Council engages an independent auditor to express an opinion on the financial statements, the
County’s management is responsible for the preparation of the financial statements and the integrity
and objectivity of the financial information and representations contained in the financial statements.
Purchasing Policy
The County ensures that consistent procedures are followed for purchases through Purchasing Policy
2018-PAD-051 which sets expenditure limits for the County. The policy ensures that items purchased
have been approved through the budget process or by separate resolution of Council.
County of Newell - 2018 Annual Financial Report Page 15
Investment Policy
The County’s excess funds are invested in accordance with Investment Policy 2014-PAD-032. This
policy has as its objectives the preservation of capital, maintenance of liquidity and the realization of
a competitive rate of return. Municipal investments are governed by restrictive legislation under the
Municipal Government Act. The County’s investment policy meets all of these requirements.
Restricted Surplus Policy
The County has established specific restricted surplus funds, through Restricted Surplus Policy 2017-
PAD-062, to provide for emergent financial needs, stabilize tax rates, set aside funds for the replacement
of vehicles, machinery, equipment, infrastructure and facilities and to minimize its financing needs.
Maintaining financial health and stability is the guiding principle behind this policy.
FINANCIAL INDICATORS DISCUSSION & ANALYSIS
The 2018 Consolidated Financial Statements are prepared in compliance with Public Sector Accounting
Standards. The consolidated financial statements provide a snapshot of the County’s financial position
at its fiscal year end (December 31) and the results of its operations, and changes in both cash flow
and net assets for the preceding year. However, the consolidated financial statements do not provide a
complete indication of the financial health of the County nor indicate how well it is performing in relation
to its economic and fiscal environment.
The Annual Financial Report seeks to expand on and explain information in the financial statements
by applying PSAB issued Statement of Recommended Practices (SORP) 4: Indicators of Financial
Condition. This information may help financial statement users better understand the risks facing
the County in maintaining the programs and services it currently provides, as well as the policy and
operational decisions it must make in light of its financial health.
This SORP is not part of generally accepted accounting principles (GAAP) and there is no requirement
for governments to implement its recommendations. Although there are numerous indicators to assess
a government’s financial condition, the SORP recommends that, at a minimum, indicators related to
sustainability, flexibility and vulnerability be considered. Definitions of these assessors follow, as well
as a selection of indicators related to each.
REPORT FROM THE MANAGER OF FINANCE
County of Newell - 2018 Annual Financial ReportPage 16
SUSTAINABILITY
Sustainability measures the ability of the County to maintain its existing programs and services,
including maintaining its financial obligations to creditors, without increasing its debt or raising taxes.
The following indicators have been selected to assess sustainability.
Annual Surplus or Deficit
This annual result indicates the extent to which the County’s revenue is more than its expenses during
that year. A surplus means revenues exceed expenses while a deficit may indicate the County has not
lived within its means. Long-term financial sustainability is dependent upon ensuring that on average,
over time, expenses are less than revenues. In essence, this requires current taxpayers to fully meet
the cost of services.
The 2017 deficit was driven by the transfer of water infrastructure assets with a value of $33.3 million to
Newell Regional Services Corporation (NRSC) during the year. These assets were being held in trust
for NRSC as part of the grant funded Regional Water project. NRSC issued 2,986 Class H preferred
shares with a value of $2.98 million to the County for its contribution.
REPORT FROM THE MANAGER OF FINANCE
2019 Final Budget 11
SUSTAINABILITY
Sustainability measures the ability of the County to maintain its existing programs and services, including
maintaining its financial obligations to creditors, without increasing its debt or raising taxes. The following
indicators have been selected to assess sustainability.
Annual Surplus or Deficit
This annual result indicates the extent to which the County’s revenue is more than its expenses during
that year. A surplus means revenues exceed expenses while a deficit may indicate the County has not
lived within its means. Long-term financial sustainability is dependent upon ensuring that on average,
over time, expenses are less than revenues. In essence, this requires current taxpayers to fully meet the
cost of services.
The 2017 deficit was driven by the transfer of water infrastructure assets with a value of $33.3 million to
Newell Regional Services Corporation (NRSC) during the year. These assets were being held in trust for
NRSC as part of the grant funded Regional Water project. NRSC issued 2,986 Class H preferred shares
with a value of $2.98 million to the County for its contribution.
County of Newell - 2018 Annual Financial Report Page 17
REPORT FROM THE MANAGER OF FINANCE
Financial Assets-to-Liabilities
This indicator shows the extent to which the County’s future revenues will be required to pay for past
transactions or events. A ratio greater than one indicates that financial assets are sufficient to meet
obligations and to finance future operations while a ratio less than one may mean a reliance on future
revenues or increasing debt to pay for past decisions.
This ratio increased by 0.95 in 2018. The County remains in a relatively strong financial position with
$4.49 in financial assets for every $1.00 of financial liability.
2019 Final Budget 12
Financial Assets-to-Liabilities
This indicator shows the extent to which the County’s future revenues will be required to pay for past
transactions or events. A ratio greater than one indicates that financial assets are sufficient to meet
obligations and to finance future operations while a ratio less than one may mean a reliance on future
revenues or increasing debt to pay for past decisions.
This ratio increased by 0.95 in 2018. The County remains in a relatively strong financial position with
$4.49 in financial assets for every $1.00 of financial liability.
Photo by S. Stanway (Brooks Bulletin)
County of Newell - 2018 Annual Financial ReportPage 18
REPORT FROM THE MANAGER OF FINANCE
Taxes Receivable as a % of Tax Levies
The following chart reflects the total uncollected property taxes as a percentage of the total tax levy. Every year, a percentage of property owners are unable to pay property taxes for a variety of reasons. If this percentage increases over time, it may indicate an overall decline in the County’s economic health. Additionally, as uncollected property taxes rise, liquidity decreases.
2019 Final Budget 13
Taxes Receivable as a % of Tax Levies
The following chart reflects the total uncollected property taxes as a percentage of the total tax levy.
Every year, a percentage of property owners are unable to pay property taxes for a variety of reasons. If
this percentage increases over time, it may indicate an overall decline in the County’s economic health.
Additionally, as uncollected property taxes rise, liquidity decreases.
2019 Final Budget 13
Taxes Receivable as a % of Tax Levies
The following chart reflects the total uncollected property taxes as a percentage of the total tax levy.
Every year, a percentage of property owners are unable to pay property taxes for a variety of reasons. If
this percentage increases over time, it may indicate an overall decline in the County’s economic health.
Additionally, as uncollected property taxes rise, liquidity decreases.
County of Newell - 2018 Annual Financial Report Page 19
FLEXIBILITY
Flexibility is the degree to which the County can change its debt burden or raise taxes to respond to
rising commitments. Increasing debt and taxation reduces flexibility and the County’s ability to respond
to changing circumstances.
Debt Servicing Costs-to-Revenues
The ratio of debt servicing costs-to-revenues indicates the amount of current revenue that is required to
service past borrowing decisions and, as a result, is not available for programs and services.
REPORT FROM THE MANAGER OF FINANCE
2019 Final Budget 14
FLEXIBILITY
Flexibility is the degree to which the County can change its debt burden or raise taxes to respond to rising
commitments. Increasing debt and taxation reduces flexibility and the County’s ability to respond to
changing circumstances.
Debt Servicing Costs-to-Revenues
The ratio of debt servicing costs-to-revenues indicates the amount of current revenue that is required to
service past borrowing decisions and, as a result, is not available for programs and services.
2019 Final Budget 14
FLEXIBILITY
Flexibility is the degree to which the County can change its debt burden or raise taxes to respond to rising
commitments. Increasing debt and taxation reduces flexibility and the County’s ability to respond to
changing circumstances.
Debt Servicing Costs-to-Revenues
The ratio of debt servicing costs-to-revenues indicates the amount of current revenue that is required to
service past borrowing decisions and, as a result, is not available for programs and services.
County of Newell - 2018 Annual Financial ReportPage 20
Debt Limits and Debt Payments
The County is limited in the amount of debt that it can incur beyond the limitations specified in Alberta
Regulation 255/00. The maximum allowable debt the County could hold within this regulation is
approximately $60.3 million. The County held outstanding debt balances representing 24.7% of this
maximum allowable amount at the end of 2018. This leaves the County with approximately $45.4
million of borrowing room.
REPORT FROM THE MANAGER OF FINANCE
Debt per capita is expected to decrease steadily moving forward. The last of the debentures supporting
the rural water project is scheduled to be repaid in full by 2023.
2019 Final Budget 15
Debt Limits and Debt Payments
The County is limited in the amount of debt that it can incur beyond the limitations specified in Alberta
Regulation 255/00. The maximum allowable debt the County could hold within this regulation is
approximately $60.3 million. The County held outstanding debt balances representing 24.7% of this
maximum allowable amount at the end of 2018. This leaves the County with approximately $45.4 million
of borrowing room.
Debt per capita is expected to decrease steadily moving forward. The last of the debentures supporting
the rural water project is scheduled to be repaid in full by 2023.
2019 Final Budget 15
Debt Limits and Debt Payments
The County is limited in the amount of debt that it can incur beyond the limitations specified in Alberta
Regulation 255/00. The maximum allowable debt the County could hold within this regulation is
approximately $60.3 million. The County held outstanding debt balances representing 24.7% of this
maximum allowable amount at the end of 2018. This leaves the County with approximately $45.4 million
of borrowing room.
Debt per capita is expected to decrease steadily moving forward. The last of the debentures supporting
the rural water project is scheduled to be repaid in full by 2023.
County of Newell - 2018 Annual Financial Report Page 21
Restricted Surplus
Restricted surplus funds are included as part of the County’s accumulated surplus. Restricted surplus funds are a critical component of the County’s long-term financing and capital plan. The County’s Restricted Surplus Policy 2017-PAD-062 establishes specific restricted surplus funds to:
Stabilize tax rates in the face of variable and uncontrollable factors (consumption, interest rates, unemployment rates, changes in subsidies)
Provide financing for one-time or short-term requirements without permanently impacting the tax and utility rates
Make provisions for replacement or acquisitions of assets and infrastructure that are currently being consumed and amortized
Avoid spikes in funding requirements of the capital plan by reducing the reliance on long-term debt borrowings
Provide flexibility to manage debt levels and protect the municipality’s financial position
Provide for future liabilities incurred in the current year but paid for in the future
Provide a source of internal financing
Ensure adequate cash flows
REPORT FROM THE MANAGER OF FINANCE
Restricted surplus offers liquidity which enhances the County’s flexibility in addressing operating
requirements and in permitting the County to temporarily fund capital projects internally, allowing it time
to access debt markets and take advantage of favourable conditions. The level of restricted surplus
funds required will vary for a number of reasons including:
Services provided by the County
Age and condition of infrastructure, inventory of fleet and vehicles supporting County operations
Economic conditions and projections
Internal debt and restricted surplus policies
Restricted Surplus Policy 2017-PAD-062 specifies minimum balances to be maintained for the restricted
surplus funds listed below. The County is in compliance with this policy as at December 31, 2018.
2019 Final Budget 16
Restricted Surplus
Restricted surplus funds are included as part of the County’s accumulated surplus. Restricted surplus
funds are a critical component of the County’s long-term financing and capital plan. The County’s
Restricted Surplus Policy 2017-PAD-062 establishes specific restricted surplus funds to:
• Stabilize tax rates in the face of variable and uncontrollable factors (consumption, interest rates,
unemployment rates, changes in subsidies)
• Provide financing for one-time or short-term requirements without permanently impacting the tax
and utility rates
• Make provisions for replacement or acquisitions of assets and infrastructure that are currently
being consumed and amortized
• Avoid spikes in funding requirements of the capital plan by reducing the reliance on long-term
debt borrowings
• Provide flexibility to manage debt levels and protect the municipality’s financial position
• Provide for future liabilities incurred in the current year but paid for in the future
• Provide a source of internal financing
• Ensure adequate cash flows
Restricted surplus offers liquidity which enhances the County’s flexibility in addressing operating
requirements and in permitting the County to temporarily fund capital projects internally, allowing it time to
access debt markets and take advantage of favourable conditions. The level of restricted surplus funds
required will vary for a number of reasons including:
• Services provided by the County
• Age and condition of infrastructure, inventory of fleet and vehicles supporting County operations
• Economic conditions and projections
• Internal debt and restricted surplus policies
Restricted Surplus Policy 2017-PAD-062 specifies minimum balances to be maintained for the restricted
surplus funds listed below. The County is in compliance with this policy as at December 31, 2018.
2019 Final Budget 16
Restricted Surplus
Restricted surplus funds are included as part of the County’s accumulated surplus. Restricted surplus
funds are a critical component of the County’s long-term financing and capital plan. The County’s
Restricted Surplus Policy 2017-PAD-062 establishes specific restricted surplus funds to:
• Stabilize tax rates in the face of variable and uncontrollable factors (consumption, interest rates,
unemployment rates, changes in subsidies)
• Provide financing for one-time or short-term requirements without permanently impacting the tax
and utility rates
• Make provisions for replacement or acquisitions of assets and infrastructure that are currently
being consumed and amortized
• Avoid spikes in funding requirements of the capital plan by reducing the reliance on long-term
debt borrowings
• Provide flexibility to manage debt levels and protect the municipality’s financial position
• Provide for future liabilities incurred in the current year but paid for in the future
• Provide a source of internal financing
• Ensure adequate cash flows
Restricted surplus offers liquidity which enhances the County’s flexibility in addressing operating
requirements and in permitting the County to temporarily fund capital projects internally, allowing it time to
access debt markets and take advantage of favourable conditions. The level of restricted surplus funds
required will vary for a number of reasons including:
• Services provided by the County
• Age and condition of infrastructure, inventory of fleet and vehicles supporting County operations
• Economic conditions and projections
• Internal debt and restricted surplus policies
Restricted Surplus Policy 2017-PAD-062 specifies minimum balances to be maintained for the restricted
surplus funds listed below. The County is in compliance with this policy as at December 31, 2018.
County of Newell - 2018 Annual Financial ReportPage 22
Tangible Capital Assets
The County’s tangible capital assets (TCA) decreased by a net $3 million in 2018 which includes new
asset acquisitions of $4.4 million offset by $6.9 million in amortization expense and asset disposals with
a net book value of $511 thousand.
Significant acquisitions include:
$805 thousand – Vehicles
$696 thousand – EID Drainage Partnership
$665 thousand – Machinery and equipment
$446 thousand – Bridge replacements
Net Book Value of Tangible Capital Assets-to-Cost of Tangible Capital Assets
Net book value of TCA compared to total cost of TCA measures the extent to which the estimated useful
lives of the County’s tangible capital assets are available to provide its products and services.
As at December 31, 2018 approximately 72% of the County’s assets useful lives remain available to
provide future services.
REPORT FROM THE MANAGER OF FINANCE
2019 Final Budget 17
Tangible Capital Assets
The County’s tangible capital assets (TCA) decreased by a net $3 million in 2018 which includes new
asset acquisitions of $4.4 million offset by $6.9 million in amortization expense and asset disposals with a
net book value of $511 thousand.
Significant acquisitions include:
• $805 thousand – Vehicles
• $696 thousand – EID Drainage Partnership
• $665 thousand – Machinery and equipment
• $446 thousand – Bridge replacements
Net Book Value of Tangible Capital Assets-to-Cost of Tangible Capital Assets
Net book value of TCA compared to total cost of TCA measures the extent to which the estimated
useful lives of the County’s tangible capital assets are available to provide its products and services.
As at December 31, 2018 approximately 72% of the County’s assets useful lives remain available to
provide future services.
2019 Final Budget 17
Tangible Capital Assets
The County’s tangible capital assets (TCA) decreased by a net $3 million in 2018 which includes new
asset acquisitions of $4.4 million offset by $6.9 million in amortization expense and asset disposals with a
net book value of $511 thousand.
Significant acquisitions include:
• $805 thousand – Vehicles
• $696 thousand – EID Drainage Partnership
• $665 thousand – Machinery and equipment
• $446 thousand – Bridge replacements
Net Book Value of Tangible Capital Assets-to-Cost of Tangible Capital Assets
Net book value of TCA compared to total cost of TCA measures the extent to which the estimated
useful lives of the County’s tangible capital assets are available to provide its products and services.
As at December 31, 2018 approximately 72% of the County’s assets useful lives remain available to
provide future services.
VULNERABILITY
Vulnerability is the degree to which the
County becomes dependent on, and therefore
vulnerable to, sources of funding outside its
control or influence. The lower the County’s
own-source revenue is, the more it relies on
fiscal decisions of others.
Government Transfers-to-Total Revenue
This indicator demonstrates the level of
government transfers compared to total
revenues. The higher the percentage, the
more reliance the County puts on receipt of
funds from other levels of government. These
transfers are dependent on policy decisions
which are outside the control of the County.
The inset chart illustrates that a significant portion of total revenues in some years are attributable to
government transfers. It is important to note that the majority of these government transfers have been
used for financing major capital projects. The County’s ability to undertake such projects is dependent
in large part on grant funding from other levels of government.
Government transfers for operating represent a significantly smaller portion of total government transfers
to the County. It is management’s opinion that the County is not exposed to significant risk in terms of
its reliance on government transfers for operating to support its products and services.
Respectfully Submitted,
Matt Fenske, CPA, CA
Manager of Finance
April 11, 2019
REPORT FROM THE MANAGER OF FINANCE
2019 Final Budget 18
VULNERABILITY
Vulnerability is the degree to which
the County becomes dependent on,
and therefore vulnerable to, sources
of funding outside its control or
influence. The lower the County’s
own-source revenue is, the more it
relies on fiscal decisions of others.
Government Transfers-to-Total Revenue This indicator demonstrates the level
of government transfers compared
to total revenues. The higher the
percentage, the more reliance the
County puts on receipt of funds from
other levels of government. These
transfers are dependent on policy
decisions which are outside the control of the County.
The inset chart illustrates that a significant portion of total revenues in some years are attributable to
government transfers. It is important to note that the majority of these government transfers have
been used for financing major capital projects. The County’s ability to undertake such projects is
dependent in large part on grant funding from other levels of government.
Government transfers for operating represent a significantly smaller portion of total government
transfers to the County. It is management’s opinion that the County is not exposed to significant risk
in terms of its reliance on government transfers for operating to support its products and services.
Respectfully Submitted,
Matt Fenske, CPA, CA
Manager of Finance
April 11, 2019
2019 Final Budget 18
VULNERABILITY
Vulnerability is the degree to which
the County becomes dependent on,
and therefore vulnerable to, sources
of funding outside its control or
influence. The lower the County’s
own-source revenue is, the more it
relies on fiscal decisions of others.
Government Transfers-to-Total Revenue This indicator demonstrates the level
of government transfers compared
to total revenues. The higher the
percentage, the more reliance the
County puts on receipt of funds from
other levels of government. These
transfers are dependent on policy
decisions which are outside the control of the County.
The inset chart illustrates that a significant portion of total revenues in some years are attributable to
government transfers. It is important to note that the majority of these government transfers have
been used for financing major capital projects. The County’s ability to undertake such projects is
dependent in large part on grant funding from other levels of government.
Government transfers for operating represent a significantly smaller portion of total government
transfers to the County. It is management’s opinion that the County is not exposed to significant risk
in terms of its reliance on government transfers for operating to support its products and services.
Respectfully Submitted,
Matt Fenske, CPA, CA
Manager of Finance
April 11, 2019
Page 24
Photo by S. Stanway (Brooks Bulletin)
Page 25County of Newell - 2018 Annual Financial Report
section 2
CONSOLIDATED
FINANCIAL STATEMENTS
Page 26
Photo by County of Newell Agricultural Services Department
Page 27County of Newell - 2018 Annual Financial Report
CONSOLIDATED FINANCIAL STATEMENTS
County of Newell - 2018 Annual Financial ReportPage 28
CONSOLIDATED FINANCIAL STATEMENTS
County of Newell - 2018 Annual Financial Report Page 29
CONSOLIDATED FINANCIAL STATEMENTS
County of Newell - 2018 Annual Financial ReportPage 30
CONSOLIDATED FINANCIAL STATEMENTS
1
COUNTY OF NEWELL
Consolidated Statement of Financial Position
December 31, 2018, with comparative information for 2017
2018 2017
Financial assets: Cash and cash equivalents (note 2) $ 3,349,499 $ 2,648,535 Taxes and grants in place of taxes receivable (note 3) 1,700,222 1,312,676 Trade and other receivables (note 4) 12,149,564 14,820,227 Land held for resale 19,748 31,491 Investments (note 5) 81,671,584 72,549,878 Notes receivable (note 6) -- 789,542 Other financial assets 6,495 9,819
98,897,112 92,162,168
Financial liabilities: Accounts payable and accrued liabilities 4,212,382 2,407,267 Employee benefit obligations (note 8) 1,580,098 1,604,991 Unearned revenue (note 9) 297,964 22,000 Long-term debt - operating (note 10) -- 789,542 Long-term debt - capital (note 11) 14,882,255 20,020,644 Provision for landfill closure and post-closure costs (note 12) 361,378 662,535 Provision for gravel pit closure and post-closure costs (note 12) 416,059 331,814 Deposit liabilities (note 2) 269,291 212,408
22,019,427 26,051,201 Net financial assets 76,877,685 66,110,967
Non-financial assets:
Prepaid expenses 131,631 118,829 Tangible capital assets (note 7) 199,229,568 202,274,435
Inventory for consumption 2,139,527 1,170,123
201,500,726 203,563,387 Contingent liabilities (note 20)
Accumulated surplus (note 13) $278,378,411 $269,674,354
The accompanying notes are an integral part of these consolidated financial statements.
County of Newell - 2018 Annual Financial Report Page 31
CONSOLIDATED FINANCIAL STATEMENTS
2
COUNTY OF NEWELL
Consolidated Statement of Financial Activities Year ended December 31, 2018, with comparative information for 2017
Budget 2018 2017
Revenues: Net municipal property taxes (note 14) $ 33,130,046 $ 33,087,488 $ 32,278,376 Special levies 4,972,179 114,362 117,189 User fees and sale of goods 2,081,005 3,310,758 2,618,838 Government transfers (note 15) 626,574 685,888 638,510 Penalties and cost of taxes 131,000 280,078 210,582 Investment income 1,220,925 2,000,408 1,234,488 Licenses and permits 152,000 213,321 255,278 Other revenue 107,900 421,622 634,705 Gain (loss) on disposal of tangible capital assets - 102,936 143,662
42,421,629 40,216,861 38,131,628 Expenses (note 16): Legislative 581,800 467,697 515,343 Administration 4,934,564 4,510,648 4,381,172 Corporate safety services 331,965 318,794 339,779
Fire and by-law enforcement 1,641,524 1,172,017 1,156,185 Disaster and emergency services 290,023 244,948 244,070 Roads, streets, walks and lighting 12,537,923 11,411,031 10,873,803 Airport 139,733 111,071 115,279 Water and waste water 3,263,845 2,925,322 2,890,116
Waste management 332,798 470,972 698,556 Family and community support 65,466 64,466 79,466 Municipal planning 674,623 479,191 571,253 Community and agricultural services 2,006,477 1,783,155 1,609,879 Subdivision land and development 183,395 186,695 190,737 Recreation and parks 845,767 828,494 1,873,728 Culture and library 160,653 160,653 155,326 Other 98,425 158,034 1,269,883
28,088,981 25,293,188 26,964,575
Annual surplus before the undernoted 14,332,648 14,923,673 11,167,053 Other: Contributed to other governments (19,767,188) (6,319,496) -- Transfer of assets to Newell Regional Services Corporation -- -- (30,338,627) Government transfers (note 15) -- 99,880 173,520
Annual surplus (deficit) (5,434,540) 8,704,057 (18,998,054)
Accumulated surplus, beginning of year 269,674,354 269,674,354 288,672,408
Accumulated surplus, end of year $264,239,814 $278,378,411 $269,674,354
The accompanying notes are an integral part of these consolidated financial statements.
County of Newell - 2018 Annual Financial ReportPage 32
CONSOLIDATED FINANCIAL STATEMENTS
3
COUNTY OF NEWELL
Consolidated Statement of Change in Net Financial Assets December 31, 2018, with comparative information for 2017
Budget 2018 2017
Annual surplus (deficit) $(5,434,540) $ 8,704,057 $ (18,998,054) Acquisition of tangible capital assets (10,379,211) (4,382,530) (15,587,875) Contributed (transferred) tangible capital assets - - 33,324,214 Proceeds on disposal of tangible capital assets - 614,248 556,406 Amortization of tangible capital assets 7,155,882 6,916,087 6,528,819 (Gain) loss on disposal of tangible capital assets - (102,936) (143,662)
(8,657,869) 11,748,926 5,679,847 Use (acquisition) of inventories for consumption (1,200,000) (969,406) 220,631 Use (acquisition) of prepaid expenses - (12,802) (3,844)
Change in net financial assets (1,200,000) 10,766,718 5,896,635 Net financial assets, beginning of year 66,110,967 66,110,967 60,214,332
Net financial assets, end of year $56,253,098 $ 76,877,685 $ 66,110,967
The accompanying notes are an integral part of these consolidated financial statements.
Photo by County of Newell Municipal Services Department
County of Newell - 2018 Annual Financial Report Page 33
CONSOLIDATED FINANCIAL STATEMENTS
4
COUNTY OF NEWELL
Consolidated Statement of Cash Flows Year ended December 31, 2018, with comparative information for 2017
2018 2017
Cash provided by (used in): Operations: Annual surplus (deficit) $ 8,704,057 $ (18,998,054) Items not involving cash: Amortization 6,916,087 6,528,819 Transferred (contributed) assets - 33,324,214 Loss (gain) on disposal of tangible capital assets (102,936) (143,662) Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable (387,545) (18,294) Trade and other receivables 2,670,663 5,367,626 Land held for resale 11,743 - Other financial assets 3,324 76 Prepaid expenses (12,802) (3,844) Inventory for consumption (969,406) 220,631 Accounts payable and accrued liabilities 1,805,115 205,813 Employee benefit obligations (24,893) 76,153 Unearned revenue 275,964 (174,685) Landfill closure and post-closure costs (301,157) 349,002 Gravel pit closure and post-closure costs 84,245 (3,527)
18,672,459 26,730,268 Capital activities: Proceeds on disposal of tangible capital assets 614,248 556,406 Purchase of tangible capital assets (4,382,531) (15,587,875)
(3,768,283) (15,031,469) Investing activities: Decrease (increase) in temporary investments - 18,196,412
Increase in investments (9,121,706) (26,097,781) Payments received on notes receivable 789,542 984,096
(8,332,164) (6,917,273) Financing activities: Repayment of long-term debt: - operating (789,542) (748,381) - capital (5,138,389) (5,034,630) Proceeds from debt acquired - 640,850 Increase (decrease) in deposit liabilities 56,883 13,534 (5,871,048) (5,128,627)
Increase (decrease) in cash and cash equivalents 700,964 (347,101) Cash and cash equivalents, beginning of year 2,648,535 2,995,636
Cash and cash equivalents, end of year (note 2) $ 3,349,499 $ 2,648,535
Cash and cash equivalents is comprised of: Cash $ 3,349,499 $ 2,648,535
$ 3,349,499 $ 2,648,535
The accompanying notes are an integral part of these consolidated financial statements.
County of Newell - 2018 Annual Financial ReportPage 34
CONSOLIDATED FINANCIAL STATEMENTS
5
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
1. Significant accounting policies:
The consolidated financial statements of the County of Newell (the “County”) are the
representations of management prepared in accordance with Canadian Public Sector accounting
standards. Significant aspects of the accounting policies adopted by the County are as follows:
(a) Cash and cash equivalents:
Cash and cash equivalents include cash on hand and short-term deposits which are highly
liquid with original maturities of less than three months from the date of acquisition.
(b) Reporting entity:
The consolidated financial statements reflect the assets, liabilities, revenues and expenses,
changes in net financial assets and cash flows of the County, which comprises of all the
organizations that are owned or controlled by the County and are, therefore accountable to
the Council for the administration of their financial affairs and resources.
All significant inter-department transactions and balances are eliminated on consolidation.
Taxes levied also include requisitions for educational, health care, social and other external
organizations that are not part of the County.
The statements exclude trust assets that are administered for the benefit of external parties.
(c) Basis of accounting:
The financial statements are prepared using the accrual basis of accounting. The accrual
basis of accounting records revenue as it is earned and measurable. Expenses are
recognized as they are incurred and measurable based upon receipt of goods or services
and/or the legal obligation to pay.
Funds from external parties and earnings thereon restricted by agreement or legislation are
accounted for as deferred revenue until used for the purpose specified.
(d) Investments:
Investments are recorded at cost. Where there has been a loss in value of an investment
other than a temporary decline, the investment is written down to reflect the loss.
(e) Requisition over-levy and under-levy:
Over-levies and under-levies arise from the difference between the actual property tax levy
made to cover each requisition and the actual amount requisitioned.
If the actual levy exceeds the requisition, the over-levy is accrued as a liability and property
tax revenue is reduced. Where the actual levy is less than the requisition amount, the under-
levy is accrued as a receivable and as property tax revenue.
Requisition tax rates in the subsequent year are adjusted for any over-levies for the prior year.
County of Newell - 2018 Annual Financial Report Page 35
CONSOLIDATED FINANCIAL STATEMENTS
6
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
1. Significant accounting policies (continued):
(f) Inventories:
Land held for resale is recorded at the lower of cost and net realizable value. Cost includes
costs for land acquisition and improvements required to prepare the land for servicing such as
clearing, stripping, and leveling charges. Related development costs incurred to provide
infrastructure such as water and waste water services, roads, sidewalks and street lighting
are recorded as capital assets under their respective function.
(g) Landfill and gravel pit closure and post-closure costs:
Pursuant to the Alberta Environment Protection and Enhancement Act, the County is required
to fund the closure of its landfill site and provide for post-closure care. Landfill closure and
post-closure activities include the final clay cover, landscaping, as well as surface and ground
water monitoring, leachate control and visual inspection. The requirement is being provided
for over the estimated remaining life of the landfill site based on usage.
The County is required to fund the closure of its gravel pits. Reclamation of these sites
includes providing final cover and landscaping. The requirement is being provided for on an
estimate of expected cost on size of sites.
(h) Government transfers:
Government transfers are recognized in the financial statements as revenues in the period
that the events giving rise to the transfer occurred, providing the transfers are authorized, all
eligibility criteria have been met by the County, and reasonable estimates of the amounts can
be made.
(i) Non-financial assets:
Non-financial assets are not available to discharge existing liabilities and are held for use in
the provision of services. They have useful lives extending beyond the current year and are
not intended for sale in the normal course of operations.
(i) Tangible capital assets:
Tangible capital assets are recorded at cost which includes all amounts that are directly
attributable to acquisition, construction, development or betterment of the asset. The cost,
less residual value, of the tangible capital assets is amortized on a straight-line basis over
the estimated useful life as follows:
Years Land Improvements 15-45 Buildings 25-70 Engineered structures 15-75 Machinery and equipment 5-40 Vehicles 5-14
Assets under construction are not amortized until the asset is available for productive use.
County of Newell - 2018 Annual Financial ReportPage 36
CONSOLIDATED FINANCIAL STATEMENTS
7
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
1. Significant accounting policies (continued):
(i) Non-financial assets (continued):
(ii) Contributions of tangible capital assets:
Tangible capital assets received as contributions are recorded at fair value at the date of
receipt and recorded as revenue.
(iii) Inventories
Inventories of materials and supplies held for consumption are recorded at the lower of
cost and replacement cost with cost determined by the average cost method.
(iv) Cultural and historical tangible capital assets:
Works of art for display are not recorded as tangible capital assets but are disclosed.
(j) Tax Revenue:
Tax revenue results from non-exchange transactions that are paid to governments in
accordance with the laws and regulations established to provide revenue to the government
for public services. The revenue is recognized when the tax has been authorized and the
taxable event has occurred.
(k) Pension expenses:
The County participates in a multi-employer defined benefit pension plan, wherein
contributions for current and past service pension benefits are recorded as expenses in the
year in which they become due.
(l) Use of estimates:
The preparation of the financial statements in conformity with Canadian public sector
accounting standards requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant areas requiring the use of management
estimates relate to the determination of allowance for doubtful accounts, provision for closure
and post-closure care, employee benefit obligations and the useful life of tangible capital
assets.
Contributions of tangible capital assets are recorded at estimated fair value at the date of
receipt.
Actual results could differ from those estimates.
County of Newell - 2018 Annual Financial Report Page 37
CONSOLIDATED FINANCIAL STATEMENTS
8
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
1. Significant accounting policies (continued):
(m) Contaminated sites:
Contaminated sites are a result of contamination being introduced into air, soil, water or
sediment of a chemical, organic or radioactive or live organism that exceeds an
environmental standard. The liability is recorded net of any expected recoveries. A liability for
remediation of a contaminated site is recognized when a site is not in productive use and is
management’s estimate of the cost of post-remediation including operation, maintenance and
monitoring. No contaminated sites have been identified.
2. Cash and cash equivalents:
2018 2017
Cash $ 3,349,499 $ 2,648,535
$ 3,349,499 $ 2,648,535
Included in cash are amounts aggregating $269,291 (2017 - $212,408) not available for current use.
2018 2017
Tax sale surplus $ 20,879 $ 20,532
Public reserve 248,412 191,876
$ 269,291 $ 212,408
County of Newell - 2018 Annual Financial ReportPage 38
CONSOLIDATED FINANCIAL STATEMENTS
9
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
3. Taxes and grants in place of taxes receivable:
2018 2017
Current $ 819,359 $ 703,962 Arrears 1,009,363 708,715
1,828,722 1,412,676 Allowance for uncollectible taxes (128,500) (100,000)
$ 1,700,222 $ 1,312,676
4. Trade and other receivables:
2018 2017
Grants $ 2,632,716 $ 7,809,602 Local improvement taxes 5,294,765 5,656,126 Other 4,222,083 1,354,499
$ 12,149,564 $ 14,820,227
Local improvement taxes carry annual interest rates ranging from 2.64% - 4.44% and are due between 2020 – 2041.
5. Investments:
2018 2017
Fixed income securities $ 78,601,321 $ 69,479,617
Credit Union Common shares 7 5 Newell Regional Services Corporation: Common shares 20 20 Preferred shares 3,070,236 3,070,236
3,070,263 3,070,261
$ 81,671,584 $ 72,549,878
Fixed income securities have effective interest rates of 2.40% to 3.46% with maturity dates from
June 2019 through December 2028. The fixed income securities have an aggregate market value
of $77,086,341 (2017 - $69,105,496).
County of Newell - 2018 Annual Financial Report Page 39
CONSOLIDATED FINANCIAL STATEMENTS
10
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
6. Notes receivable:
2018 2017
Newell Foundation $ - $ 789,542
$ - $ 789,542
7. Tangible capital assets:
Cost 2017 Additions Disposals 2018
Land $ 5,351,168 $ 19,743 $ (2,650) $ 5,368,261 Land improvements 2,037,162 -- -- 2,037,162 Buildings 20,969,663 96,375 -- 21,066,038 Engineered structures 224,166,399 2,488,379 (46,100) 226,608,678 Machinery and equipment 11,587,473 665,076 (1,012,063) 11,240,486 Vehicles 6,087,278 804,853 (466,892) 6,425,239 Work in progress, net of transfers 2,023,836 308,106 -- 2,331,942
Total $ 272,222,979 $ 4,382,532 $ (1,527,705) $275,077,806
Accumulated Amortization amortization 2017 Disposals expense 2018
Land improvements $ 965,962 $ -- $ 130,104 $ 1,096,066 Buildings 1,715,976 -- 352,523 2,068,499 Engineered structures 59,168,305 (39,027) 5,023,066 64,152,344 Machinery and equipment 5,614,140 (573,215) 941,267 5,982,192 Vehicles 2,484,161 (404,151) 469,127 2,549,137
Total $ 69,948,544 $ (1,016,393) $ 6,916,087 $ 75,848,238
Net book value 2018 2017
Land $ 5,368,261 $ 5,351,168 Land improvements 941,096 1,071,200 Buildings 18,997,539 19,253,687 Engineered structures 164,456,334 164,998,094 Machinery and equipment 5,258,294 5,973,333 Vehicles 3,876,102 3,603,117 Work in progress 2,331,942 2,023,836
Total $ 199,229,568 $ 202,274,435
Contributed tangible capital assets are recognized at fair value at the date of contribution.
County of Newell - 2018 Annual Financial ReportPage 40
CONSOLIDATED FINANCIAL STATEMENTS
11
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
8. Employee benefit obligations:
Vacation
The vacation liability is comprised of the vacation that employees are deferring to future years.
Employees have either earned the benefits (and are vested) or are entitled to these benefits within
the next budgetary year.
Sick
The sick liability is comprised of the sick pay that employees are deferring to future years.
Employees have either earned the benefits (and are vested) or are entitled to them within the next
budgetary year.
9. Unearned Revenue:
2018 2017
Government contributions $ 163,445 $ 22,000 Prepaid taxes 134,519 -
Total $ 297,964 $ 22,000
Government contributions in unearned revenue consist of the following:
Recognized as Description 2017 Received revenue 2018
ACP $ -- $ 200,536 $ (59,162) $ 141,374 Other 22,000 21,640 (21,569) 22,071
Total $ 22,000 $ 222,176 $ (80,731) $ 163,445
10. Long-term debt – operating:
2018 2017
Debenture supported with notes receivable $ - $ 789,542
Interest on long-term debt amounted to $32,569 (2017 – $74,295).
The County’s total interest paid in 2018 was $43,425 (2017 - $84,585).
County of Newell - 2018 Annual Financial Report Page 41
CONSOLIDATED FINANCIAL STATEMENTS
12
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
11. Long-term debt – capital:
2018 2017
Tax supported debentures $ 14,882,255 $ 20,020,644
Principal and interest repayments are due as follows:
Principal Interest Total
2019 $ 5,233,923 $ 300,227 $ 5,534,150 2020 3,651,630 209,611 3,861,241
2021 2,482,572 141,266 2,623,838 2022 1,845,476 81,869 1,927,345 2023 623,877 47,872 671,749 Thereafter 1,044,777 285,497 1,330,274
$ 14,882,255 $ 1,066,342 $ 15,948,597
Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates
ranging from 1.124% to 3.406% per annum and matures in periods 2019 through 2042. The
average annual interest rate is 2.179% for 2018 (2017 – 2.095%). Debenture debt is issued on
the credit and security of the County of Newell at large.
Interest on long-term debt amounted to $391,373 (2017 - $476,748).
The County’s total interest paid in 2018 was $395,760 (2017 - $468,725).
12. Provision for landfill and gravel pit closure and post-closure costs:
Alberta environmental law requires closure and post-closure care of landfill sites, which includes
final covering and landscaping, pumping of ground water and leachates from the site, and on-
going environmental monitoring, site inspections and maintenance.
The accrued liability for the remaining post-closure costs of the County’s landfill and closure and
post-closure costs for the County’s gravel pits are based on an estimate of future discounted
costs. All landfill sites are closed. One site is expected to be reclaimed in 2019, while post-closure
costs associated on another are not expected until 2028.
The estimated closure and post-closure costs for the landfill are $361,378 and $416,059 for the
gravel pits, all of which have been accrued in the financial statements.
County of Newell - 2018 Annual Financial ReportPage 42
CONSOLIDATED FINANCIAL STATEMENTS
13
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
13. Accumulated surplus:
Equity in tangible Unrestricted capital Restricted Total Total net assets assets (1) Surplus (2) 2018 2017
Beginning balance $ 1,288,951 $182,253,791 $86,131,612 $269,674,354 $288,672,408 Annual surplus (deficit) 8,704,057 -- -- 8,704,057 (18,998,054) Transfers to restricted surplus (19,043,515) -- 19,043,515 -- -- Transfers from restricted surplus 14,274,759 -- (14,274,759) -- -- Amortization of tangible capital assets 6,916,087 (6,916,087) -- -- -- Net book value of assets disposed 511,312 (511,312) -- -- -- Capital assets
internally funded (4,382,531) 4,382,531 -- -- -- Debt paid - capital (5,138,390) 5,138,390 -- -- --
Total $ 3,130,730 $184,347,313 $90,900,368 $278,378,411 $269,674,354
(1) Equity in tangible capital assets:
2018 2017
Tangible capital assets (note 7) $ 275,077,806 $ 272,222,979 Accumulated amortization (note 7) (75,848,238) (69,948,544) Long-term debt – capital (note 11) (14,882,255) (20,020,644)
$ 184,347,313 $ 182,253,791
County of Newell - 2018 Annual Financial Report Page 43
CONSOLIDATED FINANCIAL STATEMENTS
14
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
13. Accumulated surplus (continued):
(2) Restricted surplus is comprised of funds internally restricted as follows:
2018 2017
Paving $ 1,851,997 $ 127,805 Infrastructure 46,001,809 38,522,787 Future Projects 15,711,327 19,513,713 Vehicles, Machinery & Equipment 10,972,276 9,478,581 Regional Enhancement 2,258,874 4,428,874 Stabilization 3,150,000 5,400,277 Facilities 3,114,988 2,893,968
Fire Apparatus 3,756,959 3,156,346 Recreation 2,825,027 1,417,008 Tilley 50,662 50,662 Unexpended Budget Appropriation 1,206,449 1,141,591
$ 90,900,368 $ 86,131,612
14. Net municipal property taxes:
Budget 2018 2017
Taxation: Real property taxes $ 17,729,360 $ 17,683,991 $ 17,285,035 Linear property taxes 28,442,640 28,442,234 27,732,086 Government grants in place of property taxes 380,191 380,191 366,827
46,552,191 46,506,416 45,383,948 Requisitions: Alberta School Foundation Fund 12,520,449 12,517,231 12,207,543
Newell Foundation 901,696 901,696 898,029
13,422,145 13,418,927 13,105,572
Net municipal property taxes $ 33,130,046 $ 33,087,488 $ 32,278,376
County of Newell - 2018 Annual Financial ReportPage 44
CONSOLIDATED FINANCIAL STATEMENTS
15
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
15. Government transfers:
Budget 2018 2017
Transfers for operating: Provincial government $ 394,074 $ 448,368 $ 405,145 Local government 232,500 237,520 233,365
626,574 685,888 638,510 Transfers for capital: Provincial government - 99,880 173,520 Local government - - -
- 99,880 173,520
$ 626,574 $ 785,768 $ 812,030
16. Expenses by object:
Budget 2018 2017
Salaries, wages and benefits $ 8,330,118 $ 7,893,075 $ 7,895,217 Contracted and general services 5,021,703 3,793,283 3,455,799 Materials, goods, supplies and utilities 5,487,940 4,602,510 4,796,641
Transfers to organizations 1,605,651 1,608,763 2,920,646 Bank charges and short-term interest 8,500 6,407 6,014 Interest on long-term debt 439,187 423,942 551,044 Other expenditures 40,000 49,120 810,395 Amortization 7,155,882 6,916,087 6,528,819
$ 28,088,981 $ 25,293,188 $ 26,964,575
County of Newell - 2018 Annual Financial Report Page 45
CONSOLIDATED FINANCIAL STATEMENTS
16
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
17. Salary and benefits disclosure:
Disclosure of salaries and benefits for elected municipal officials and the chief administrative
officer as required by provincial regulation is as follows:
2018 2017
Benefits &
Salary (1) Allowances (2) Total Total
Council: Division 1 - Amulung $ 30,865 $ 5,452 $ 36,317 $ 37,104 Division 2 - Kallen 27,683 5,312 32,996 7,696 Division 2 – Simpson - - - 24,801 Division 3 - Philipsen 35,145 5,641 40,786 33,655 Division 4 - Hammergren 24,966 2,658 27,624 28,652 Division 5 - Fyfe 27,043 5,283 32,326 32,705 Division 6 - Christman 27,480 5,303 32,783 33,897 Division 7 - Unruh 32,331 5,517 37,848 33,093 Division 8 - De Jong 28,812 1,450 30,262 27,132 Division 9 - Douglass 43,902 2,155 46,057 52,522 Division 10 - Juss 27,284 5,294 32,578 29,954
$ 305,512 $ 44,065 $ 349,577 $ 341,212
Chief Administrative Officer $ 225,125 $ 48,420 $ 273,545 $ 269,835
1) Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria
and any other direct cash remuneration.
2) Benefits and allowances include the employer’s share of all employee benefits and
contributions or payments made on behalf of employees including pension, health care,
dental coverage, vision coverage, group life insurance, accidental disability and
dismemberment insurance, long and short-term disability plans, professional memberships
and tuition.
Benefits and allowances figures also include the employer’s share of the costs of additional
taxable benefits including special leave with pay, financial planning services, retirement
planning services, concessionary loans, travel allowances, car allowances, and club
memberships, if applicable.
County of Newell - 2018 Annual Financial ReportPage 46
CONSOLIDATED FINANCIAL STATEMENTS
17
COUNTY OF NEWELL
Notes to Consolidated Financial Statements Year ended December 31, 2018
18. Debt limits:
Section 276(2) of the Municipal Government Act requires that debt and debt limits as defined by Alberta Regulation 255/00 for the County be disclosed as follows:
2018 2017
Total debt limit $ 60,325,292 $57,197,4420 Total debt (14,882,255) (20,810,186)
Unused debt limit $ 45,443,037 $ 36,387,256
2018 2017
Debt servicing limit $ 10,054,215 $ 9,532,907 Debt servicing (5,534,150) (6,367,116)
Unused debt servicing limit $ 4,520,065 $ 3,165,791
The debt limit is calculated at 1.5 times revenue of the County (as defined in Alberta Regulation
255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond
these limitations requires approval by the Minister of Municipal Affairs. These thresholds are
guidelines used by Alberta Municipal Affairs to identify municipalities which could be at financial
risk if further debt is acquired.
19. Local authorities pension plan:
The County participates in a multi-employer defined benefit pension plan. This plan is accounted
for as a defined contribution plan.
Employees of the County participate in the Local Authorities Pension Plan (LAPP), which is one of
the plans covered by the Public Sector Pension Plans Act. The LAPP serves about 259,714
people and about 420 employers. The LAPP is financed by employer and employee contributions
and investment earnings of the LAPP fund.
Contributions for current service are recorded as expenditures in the year in which they become
due. The County is required to make current service contributions to the Plan of 10.39% of
pensionable earnings up to the year’s maximum pensionable earnings under the Canada Pension
Plan and 14.84% on pensionable earnings above this amount. Employees of the County are
required to make current service contributions of 9.39% of pensionable salary up to the year’s
maximum pensionable salary and 13.84% on pensionable salary above this amount.
Total current service contributions by the County to the LAPP in 2018 were $591,344 (2017 -
$619,332). Total current service contributions by the employees of the County to the LAPP in
2018 were $541,737 (2017 - $571,265).
At December 31, 2017, the LAPP disclosed an actuarial surplus of $4.84 billion.
County of Newell - 2018 Annual Financial Report Page 47
CONSOLIDATED FINANCIAL STATEMENTS
18
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
20. Contingent liabilities:
The County of Newell is a member of the Alberta Municipal Insurance Exchange (MUNIX). Under
the terms of membership, the County of Newell could become liable for its proportionate share of
any claim losses in excess of the funds held by the exchange. Any liability incurred would be
accounted for as a current transaction in the year the losses are determined.
21. Recent accounting pronouncements:
The Public Sector Accounting Board recently announced the following accounting
pronouncements:
(a) Financial instruments:
This section establishes recognition, measurement, and disclosure requirements for
derivative and non-derivative instruments. The standard requires fair value measurements of
derivative instruments and equity instruments; all other financial instruments can be measured
at either cost or fair value depending upon elections made by the government. Unrealized
gains and losses will be presented on the new statement of remeasurement gains and losses
arising from the adoption of PS 1201. There will also be a requirement to disclose the nature
and extent of risks arising from financial instruments and clarification is given for the de-
recognition of financial liabilities. As the Municipality does not invest in derivatives or equity
instruments based on its investment policy, it is anticipated that the adoption of this standard
will have a minimal impact on the Municipality. This standard is effective for fiscal years
beginning on or after April 1, 2019.
(b) Foreign currency translation:
This section establishes guidance on the recognition, measurement, presentation and
disclosure of assets and liabilities denominated in foreign currencies. The Section requires
monetary assets and liabilities, denominated in a foreign currency and non-monetary items
valued at fair value denominated in a foreign currency to be adjusted to reflect the exchange
rates in effect at the financial statement date. The resulting unrealized gains and losses are
to be presented in the new statement of remeasurement gains and losses. This standard is
effective for fiscal years beginning on or after April 1, 2019.
(c) Financial statement presentation:
The implementation of this standard requires a new statement of re-measurement gains and
losses separate from the statement of operations. This new statement will include the
unrealized gains and losses arising from the remeasurement of financial instruments and
items denominated in a foreign currency. This standard is effective for fiscal years beginning
on or after April 1, 2019.
Management is assessing the impact of the adoption of these standards which is not known or
reasonably estimable at this time.
County of Newell - 2018 Annual Financial ReportPage 48
CONSOLIDATED FINANCIAL STATEMENTS
19
COUNTY OF NEWELL
Notes to Consolidated Financial Statements
Year ended December 31, 2018
22. Segmented Disclosures:
Segmented disclosures (Schedule 1) are intended to enable users to better understand the
government reporting entity and the major expense and revenue activities of the County.
The segments have been selected based upon functional activities provided by the County. For
each reported segment, revenues and expenses represent both amounts directly attributable to
the segment and amounts that are allocated on a reasonable basis. The functional areas that
have been separately disclosed, along with the services they provide are as follows:
(a) General government is comprised of Council, Legislative, Corporate Administration,
Finance, Information and Computer Services, Planning, Economic Development,
Corporate Safety, Agricultural Services, Fire and Disaster Services, Bylaw Enforcement,
Community Services, Recreation, Parks and Programs and Library.
(b) Public Works and Transportation is comprised of Roads and Engineering Services.
(c) Public Utilities is comprised of Water, Wastewater and Solid Waste.
23. Budget information:
The budget information presented in these consolidated financial statements is based upon the
2018 budget approved by Council on April 5, 2018.
24. Approval of financial statements:
These financial statements were approved by Council and Management.
County of Newell - 2018 Annual Financial Report Page 49
SCHEDULE OF SEGMENTED DISCLOSURES
COUNTY OF NEWELL Schedule 1
Schedule of Segmented Disclosures
Year ended December 31, 2018, with comparative information for 2017
General
Government
Public Works
and
Transportation Public Utilities
Total
2018
General
Government
Public Works
and
Transportation Public Utilities
Total
2017
Revenue
Net taxes for municipal purposes 33,087,488$ -$ -$ 33,087,488$ 32,278,376$ -$ -$ 32,278,376$
Special levies - - 114,362 114,362 - - 117,189 117,189 User Fees and sale of goods 1,399,689 342,769 1,568,300 3,310,758 868,422 256,573 1,493,843 2,618,838
Government transfers - operating 579,286 - 106,602 685,888 533,510 - 105,000 638,510
Penalties and costs of taxes 280,078 - - 280,078 210,582 - - 210,582 Investment income 2,000,408 - - 2,000,408 1,234,488 - - 1,234,488
License and permits 213,321 - - 213,321 255,278 - - 255,278
Other 333,799 20,895 66,928 421,622 414,858 46,167 173,680 634,705 Gain (loss) on disposal of capital assets 58,294 44,642 - 102,936 12,217 131,445 - 143,662
37,952,363 408,306 1,856,192 40,216,861 35,807,731 434,185 1,889,712 38,131,628
Expenses
Salaries, wages and benefits 5,110,027 2,783,048 - 7,893,075 5,061,846 2,833,371 - 7,895,217
Contracted and general services 1,621,797 1,388,185 783,302 3,793,284 1,656,052 1,118,991 680,756 3,455,799
Materials, goods, supplies and utilities 1,425,116 2,104,693 1,072,702 4,602,511 1,392,641 2,087,032 1,316,968 4,796,641
Transfer to Organization 1,584,293 - 24,470 1,608,763 2,898,032 - 22,614 2,920,646
Bank charges and short term interest 6,407 - - 6,407 6,014 - - 6,014
Interest on long-term debt 32,569 - 391,373 423,942 74,296 - 476,748 551,044
Other expenditures 49,019 97 3 49,119 810,394 - - 810,394
Amortization 1,154,578 4,637,066 1,124,443 6,916,087 1,073,278 4,363,956 1,091,586 6,528,820 10,983,806 10,913,089 3,396,293 25,293,188 12,972,553 10,403,350 3,588,672 26,964,575
Annual surplus (deficit) before the undernoted 26,968,557 (10,504,783) (1,540,101) 14,923,673 22,835,178 (9,969,165) (1,698,960) 11,167,053
OtherContributed to other governments - (6,319,496) - (6,319,496) - - - -
Contributed assets - - - - - - (30,338,627) (30,338,627)
Government transfers - capital - 99,880 - 99,880 - 173,520 - 173,520
Annual surplus (deficit)26,968,557$ (16,724,399)$ (1,540,101)$ 8,704,057$ 22,835,178$ (9,795,645)$ (32,037,587)$ (18,998,054)$
Photo by County of Newell Municipal Services Department
Page 50
Photo by County of Newell Municipal Services Department
Page 51County of Newell - 2018 Annual Financial Report
section 3
STATISTICAL SECTION
County of Newell - 2018 Annual Financial ReportPage 52
Demographics & Other StatisticsSTATISTICAL SECTION
Demographics & Other Statistics
County of Newell - 2018 Annual Financial Report Page 53
Expenses by ObjectSTATISTICAL SECTION
Expenses by Object
Significant items driving variances in total expenses trends across the period include:
Salaries, wages and benefits:
• Increases are due to annual cost-of-living adjustments and staff movement up the salary grid.
Contracted and general services:
• Reclamation of old public works yard in 2014 ($300 thousand);
• Contracted water meter installation project in 2014 ($32 thousand).
Materials, goods, supplies and utilities:
• Construction of water line to Dinosaur Provincial Park (non-TCA) in 2014 ($359 thousand);
• Water meters for meter installation project in 2014 ($62 thousand).
Transfers to organizations:
• Transfers of insurance proceeds on the Duchess Soccer Centre to the Village of Duchess in 2014
($63 thousand) and 2015 ($1.1 million).
• Transfers under the Regional Enhancement & Cooperation Agreement to other municipalities in the
County of Newell in 2014 ($1.3 million), 2015 ($1.8 million), 2016 ($2.3 million), 2017 ($330
thousand).
Other expenditures:
• $1.1 million employee sick time liability arising from a policy change in 2016;
• Adjustment to MSI grant funding receivable of $765 thousand in 2017.
Amortization:
• Total cost of tangible capital assets has increased from $255 million in 2014 to $275 million in 2018
which has led to the increasing annual amortization expense.
Expenses by Object
Significant items driving variances in total expenses trends across the period include:
Salaries, wages and benefits:
• Increases are due to annual cost-of-living adjustments and staff movement up the salary grid.
Contracted and general services:
• Reclamation of old public works yard in 2014 ($300 thousand);
• Contracted water meter installation project in 2014 ($32 thousand).
Materials, goods, supplies and utilities:
• Construction of water line to Dinosaur Provincial Park (non-TCA) in 2014 ($359 thousand);
• Water meters for meter installation project in 2014 ($62 thousand).
Transfers to organizations:
• Transfers of insurance proceeds on the Duchess Soccer Centre to the Village of Duchess in 2014
($63 thousand) and 2015 ($1.1 million).
• Transfers under the Regional Enhancement & Cooperation Agreement to other municipalities in the
County of Newell in 2014 ($1.3 million), 2015 ($1.8 million), 2016 ($2.3 million), 2017 ($330
thousand).
Other expenditures:
• $1.1 million employee sick time liability arising from a policy change in 2016;
• Adjustment to MSI grant funding receivable of $765 thousand in 2017.
Amortization:
• Total cost of tangible capital assets has increased from $255 million in 2014 to $275 million in 2018
which has led to the increasing annual amortization expense.
County of Newell - 2018 Annual Financial ReportPage 54
Expenses by FunctionSTATISTICAL SECTION
Expenses by Function
Expenses by Function
County of Newell - 2018 Annual Financial Report Page 55
Revenues by SourceSTATISTICAL SECTION
Revenues by Source
Property taxes continue to be the most significant source of revenue for the County, comprising from 74% to 84% of
total operating revenues over the period reported above. A few of the more significant items driving variances in total
revenue trends across the period include:
• Government transfers for operating and capital, which are dependent on other levels of government;
• Insurance proceeds received in 2014 and 2015 for the Duchess Soccer Centre which was destroyed by fire;
• Contributed assets received from the Tilley Fire Association in 2016;
• Special levies, which include local improvement taxes, and depend on local improvement projects
completed in a given year; and
• Proceeds received from bonding companies for contract completion of the Regional Water Project which
have been included in Other revenue in 2014 and 2015.
Photo by S. Stanway (Brooks Bulletin)
Photo by S. Stanway (Brooks Bulletin)