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Home My WebLink About2016 Annual Report - long version (web) COUNTY OF NEWELL COUNTY OF NEWELL, ALBERTA, CANADA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDING DECEMBER 31, 2016 Photograph by S. Kipta C OUNTY OF N EWELL, A LBERTA, C ANADA 2016 ANNUAL FINANCIAL REPORT F OR THE FISCAL PERIOD ENDING D ECEMBER 31, 2016 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: ADMINISTRATION Telephone: 403-362-3266 E-Mail: administration@newellmail.ca The 2016 Annual Financial Report is available online at www.countyofnewell.ab.ca Photograph by C. Petersen P AGE 2 TABLE OF CONTENTS SECTION 1 T HE C OUNTY OF N EWELL Vision & Mission 7 County Council 9 Organizational Chart 10 SECTION 2 R EPORT FROM THE M ANAGER OF F INANCE Introduction 14 GFOA Canadian Award for Financial Reporting 14 2016 Financial Highlights 15 Management Reporting & Control 16 Financial Indicators Discussion & Analysis 17 SECTION 3 C ONSOLIDATED F INANCIAL S TATEMENTS ManagementÓs Responsibility for the Consolidated Financial Statements 29 Independent AuditorsÓ Report 30 Consolidated Statement of Financial Position 32 Consolidated Statement of Financial Activities 33 Consolidated Statement of Change in Net Financial Assets 34 Consolidated Statement of Cash Flows 35 Notes to Consolidated Financial Statements 36 Schedule of Segmented Disclosures 53 SECTION 4 F INANCIAL & S TATISTICAL S ECTION Demographics & Other Statistics 56 Expenses by Object 57 Revenues by Source 59 C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 3 Photograph by M. Marshall P AGE 4 SECTION 1 THE COUNTY OF NEWELL C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 5 Photograph by S. Martens P AGE 6 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. Photograph by H. Travis C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 7 COUNTY PROFILE The County of Newell is a rural municipality (5900 sq. km.) located in southeast Alberta in an area northeast of the City of Lethbridge. The largest urban communities within the County are the City of Brooks and the Town of Bassano. The County provides a number of services Î directly or jointly with other municipalities Î to the residents protection, garbage disposal, planning and development administration, agricultural services, recreation and parks, family and community support services and bylaw enforcement. 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 1500 non-agricultural business enterprises within the County and its municipalities. The County of Newell has a thriving and extensive agricultural base with ready access to Calgary and its global transportation linkages. 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 The County has one of AlbertaÓs most 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 CanadaÓs largest man- made lakes, Dinosaur Provincial Park - a UNESCO World Heritage Site, and wildlife watching. Business costs are low. Quality of life is high Î with a full range of recreation, health and cultural amenities. P AGE 8C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT COUNTY COUNCIL DIVISION 1 Rolling Hills DIVISION 2 Tilley DIVISION 3 Patricia/Millicent DIVISION 4 Rainier/Scandia/Bow City DIVISION 5 Cassils/Lake Newell Resort Clarence Amulung Councillor Gordon Simpson Councillor Anne Marie PhilipsenCouncillor Wayne HammergrenCouncillor Tracy Fyfe (403) 964-2292(403) 377-2596(403) 793-2076 amulungc@newellmail.casimpsong@newellmail.caphilipsena@newellmail.cahammergrenw@newellmail.cafyfet@newellmail.ca DIVISION 6 Bassano DIVISION 7 Rosemary DIVISION 8 Duchess DIVISION 9 Gem DIVISION 10 Brooks Councillor Kelly ChristmanCouncillor Ellen UnruhCouncillor Brian de JongReeve Molly DouglassCouncillor Lionel Juss (403) 641-2274(403) 641-2562 christmank@newellmail.caunruhe@newellmail.cadejongb@newellmail.cadouglassm@newellmail.cajussl@newellmail.ca C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 9 ORGANIZATIONAL CHART DIRECTOR OF MANAGER OF AGRICULTURAL AGRICULTURAL REEVE SERVICES CHIEF SERVICES ADMINISTRATIVE & OFFICER COUNCIL DIRECTOR OF INFORMATION & TECHNOLOGY MANAGER OF PLANNING & EXECUTIVE DEVELOPMENT ASSISTANT MANAGER OF DIRECTOR OF DIRECTOR OF OPERATIONS MUNICIPAL CORPORATE SERVICES MANAGER OF SERVICES CORPORATE SAFETY SERVICES MANAGER OF ENGINEERING SERVICES MANAGER OF MUNICIPAL FIRE & ENFORCEMENT EMERGENCY SUPERVISOR MANAGER OF SERVICES FINANCE C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 10 Photograph by M. Slomp Photograph by M. Marshall P AGE 12 SECTION 2 REPORT FROM THE MANAGER OF FINANCE C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 13 REPORT FROM THE MANAGER OF FINANCE I NTRODUCTION activities and available resources. It also provides an opportunity to analyze and comment on the GFOA C ANADIAN A WARD FOR F INANCIAL R EPORTING In order to be awarded a Canadian Award for Financial Reporting, a government unit must publish an standards. Such reports should go beyond the minimum requirements of generally accepted accounting principles and demonstrate an effort to clearly communicate the municipal governmentÓs 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. P AGE 14C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT 2016 FINANCIAL HIGHLIGHTS C ONSOLIDATED S TATEMENT OF F INANCIAL P OSITION consist primarily of tangible capital assets and inventory for consumption, increased by $5.7 million. of $13.5 million for 2016. C ONSOLIDATED S TATEMENT OF F INANCIAL A CTIVITIES Revenues were $1.5 million higher than budgeted or 104.5% of budgeted revenues. This is largely due to recognition of local improvement taxes and higher than expected returns on investments. under budget due to lower than expected overtime costs in the Municipal Services and Agricultural Services departments as well as the elimination of two full-time positions in the Economic Development department. Contracted services were under budget primarily due to lower than expected repairs and maintenance on roads and utility systems as well as uncompleted water pond decommissioning projects which have been carried forward for completion in 2017. Materials, goods, supplies and utilities were under budget primarily due to lower than expected fuel costs and less need for road maintenance materials such as gravel, sand, and salt. The County received $904 thousand of contributed assets during the year, including the Tilley Fire Hall ($650 thousand), playground equipment ($60 thousand), and cash from the Tilley Fire Association ($194 thousand). The County ended the year with an Annual Surplus of $13.5 million. C ONSOLIDATED S TATEMENT OF C HANGE IN N ET F INANCIAL A SSETS end of the year. This indicates the County can afford to settle its liabilities. C ONSOLIDATED S TATEMENT OF C ASH F LOWS Cash and cash equivalents decreased by $13.6 million in 2016. Operations provided cash of investing activities and $5.7 million was used to repay long term debt. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 15 REPORT FROM THE MANAGER OF FINANCE M ANAGEMENT R EPORTING & C ONTROL 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 After the budget is adopted by Council, expenditures are controlled against budget by formal policies Accounting Procedures The CountyÓs accounting system and related internal controls are designed to provide reasonable loss from unauthorized use or disposition. The CountyÓs 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 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. Purchasing Policy The County ensures that consistent procedures are followed for purchases through Purchasing Policy 2011-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. P AGE 16C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE Investment Policy The CountyÓs 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 CountyÓs investment policy meets all of these requirements. Restricted Surplus Policy F INANCIAL I NDICATORS D ISCUSSION & A NALYSIS The 2016 Consolidated Financial Statements are prepared in compliance with Public Sector Accounting by applying PSAB issued Statement of Recommended Practices (SORP) 4: Indicators of Financial the County in maintaining the programs and services it currently provides, as well as the policy and 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 and vulnerability well as a selection of indicators related to each. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 17 REPORT FROM THE MANAGER OF FINANCE SUSTAINABILITY Sustainability measures the ability of the County to maintain its existing programs and services, The following indicators have been selected to assess sustainability. This annual result indicates the extent to which the CountyÓs revenue is more than its expenses during over time, expenses are less than revenues. In essence, this requires current taxpayers to fully meet the cost of services. replacement and debt repayments. On an annual basis 50% of the annual amortization charge for facilities and infrastructure, and 100% of the annual amortization charge for vehicles, machinery and equipment is raised from municipal tax revenues and transferred to restricted surplus funds to support future asset replacement. It is important of asset replacement in the future. Taking into account future replacement costs in determining the developing an asset management plan that will assist in determining appropriate annual surplus levels. P AGE 18C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE Financial Assets-to-Liabilities This indicator shows the extent to which the CountyÓs future revenues will be required to pay for past revenues or increasing debt to pay for past decisions. years as annual principal payments on debt decrease the CountyÓs liability balance. Photograph by M. Marshall C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 19 REPORT FROM THE MANAGER OF FINANCE Taxes Receivable as a % of Tax Levies 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 CountyÓs economic health. Additionally, as uncollected property taxes rise, liquidity decreases. Total Tax Levy (includes requisitions) 38,571,559 40,464,388 41,536,602 42,780,809 43,457,273 Taxes Receivable (before allowance) Current 411,923 588,708 600,093 462,904 599,967 Arrears 498,988 627,660 770,179 695,806 794,415 910,911 1,216,368 1,370,272 1,158,710 1,394,382 Taxes Receivable as a % of the Current Levy Current 1.07%1.45%1.44%1.08%1.38% Arrears1.29%1.55%1.85%1.63%1.83% Taxes Collected - Current Year98.93%98.55%98.56%98.92%98.62% Taxable Assessment3,990,255,860 4,209,007,890 4,324,192,910 4,413,249,420 4,237,510,910 Municipal Tax Rates Residential3.33%3.33%3.33%3.39%3.39% Farmland3.33%3.33%3.33%3.39%3.58% Non-residential6.71%6.71%6.71%6.77%7.40% P AGE 20C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE FLEXIBILITY Flexibility is the degree to which the County can change its debt burden or raise taxes to respond to 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. 20122013201420152016 Debt servicing costs 2,942,755 6,336,321 6,336,321 Revenues 35,375,534 39,265,145 36,217,193 Ratio 9.05%14.23%16.14%17.50% servicing costs-to-revenues. Decreases in special levies and government transfers for operating revenues in 2016 drove the increase in this ratio. This ratio is expected to remain relatively consistent until 2019 when it is expected to begin decreasing as debentures for the rural water project are repaid. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 21 REPORT FROM THE MANAGER OF FINANCE Debt Limits and Debt Payments Alberta Regulation 255/00. The maximum allowable debt the County could hold within this regulation of this maximum allowable amount at the end of 2016. This leaves the County with approximately of borrowing room. 20122013201420152016 Debt limit Maximum allowable debt 54,325,790 Total debt21,594,161 30,054,422 31,604,643 25,952,347 Percentage used44.3%44.0%55.0%53.7% Maximum Allowable Annual Debt Payment Maximum allowable annual debt payment 9,111,471 Annual payments on existing debt 2,942,755 6,336,321 6,336,321 Percentage used36.2%34.3%56.9%64.5%70.0% Debt Per Capita 3,401 4,210 3,449 projects as more of the debt limit has been used. 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. P AGE 22C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE R ESTRICTED S URPLUS Restricted Surplus funds are included as part of the CountyÓs accumulated surplus and details of these Stabilize tax rates in the face of variable and uncontrollable factors (consumption, interest rates, unemployment rates, changes in subsidies) 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 for future liabilities incurred in the current year but paid for in the future 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 Economic conditions and projections Internal debt and restricted surplus policies surplus funds listed below. The County is in compliance with this policy as at December 31, 2016. Balance at Minimum Balance % of minimum % of accumulated Dec. 31, 2016Required balance heldamortization funded Fund description Infrastructure 52% Vehicles, Machinery & Equipment 7,532,533111%111% Facilities 1,111,343242%121% Stabilization 5,762,969 3,141,371n/a Fire Apparatus 3,224,453 250,0001290%n/a C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 23 REPORT FROM THE MANAGER OF FINANCE Tangible Capital Assets The CountyÓs tangible capital assets (TCA) increased by a net $5,994,027 in 2016 which includes new with a net book value of $223,307. ¤ $3,330,310 Î Rural Water System ¤ $3,755,594 Î Tilley Infrastructure Upgrades ¤ $3,616,951 Î Road Drainage, Paving & Reconstruction ¤ $650,905 Î Tilley Fire Hall ¤ $110,100 Î Pathway to Centennial Regional Arena 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 CountyÓs tangible capital assets are available to provide its products and services. provide future services. 20122013201420152016 NBV OF TCA 179,395,312 COST OF TCA 202,714,903 254,644,553 279,449,067 291,174,700 NBV OF TCA-TO-COST OF TCA 77.29%79.02%79.07%77.94% P AGE 24C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT REPORT FROM THE MANAGER OF FINANCE VULNERABILITY Vulnerability is the degree to which the County becomes dependent on, and therefore vulnerable to, sources of funding outside its own-source revenue is, the more it relies on 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. transfers. It is important to note that the majority of these government transfers have been used for part on grant funding from other levels of government. 20122013201420152016 Government transfers for capital 9,710,706 16,044,107 Government transfers for operating 1,073,512 933,439 Total transfers 11,005,520 7,414,210 16,977,546 4,504,557 Total revenue 49,326,774 57,142,957 40,990,175 Government transfers-to-total revenue 25.6%16.1%24.1%29.7%11.0% Transfers for capital-to-total transfers 91.0%94.5% Transfers for operating-to-total transfers 12.0%9.0%5.5%14.1% its reliance on government transfers for operating to support its products and services. Respectfully Submitted, Matt Fenske, CA Manager of Finance April 6, 2017 Photograph by L. Dewar C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 26 SECTION 3 CONSOLIDATED FINANCIAL STATEMENTS C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 27 Photograph by C. Takeda P AGE 28 CONSOLIDATED FINANCIAL STATEMENTS C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 29 CONSOLIDATED FINANCIAL STATEMENTS P AGE 30C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS Photograph by M. Marshall C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 31 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Financial Position December 31, 2016, with comparative information for 2015 2016 2015 Financial assets: Cash and cash equivalents (note 2) $ $ Taxes and grants in place of taxes receivable (note 3) 1, Trade and other receivables (note 4) 23,127,515 Land held for resale 31,491 Investments (note 5) 46,452,097 42,262,136 Notes receivable (note 6) 1,773,637 2,995,066 Other financial assets 5 90,941,403 Financial liabilities: Accounts payable and accrued liabilities 2,201,452 Employee benefit obligations (note ) 405,626 Unearned revenue (note 9) Long-term debt - operating (note 10) 1,537,923 Long-term debt - capital (note 11) 24,414,424 29,357,355 Provision for landfill closure and post-closure costs (note 12) 313,533 317,901 Provision for gravel pit closure and post-closure costs (note 12) 335,341 350,594 Deposit liabilities (note 2) 243,991 30,727,071 36,634,539 Net financial assets 60,214,332 52,365,506 Non-financial assets: Prepaid expenses 106,111 Tangible Capital Assets (note 7) Inventory for consumption 1,390,753 1,719,459 Contingent liabilities (note 20) Accumulated surplus (note 13) $ $ The accompanying notes are an integral part of these consolidated financial statements. P AGE 32C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Financial Activities Year ended December 31, 2016, with comparative information for 2015 Budget 2016 2015 Revenues: Net municipal property taxes (note 14) $ 29, $ 29,792,314 $ Special levies 442,963 1, User fees and sale of goods 2,109,165 Government transfers (note 15) 579,624 933,439 Penalties and cost of taxes 131,775 Investment income 1,252,509 1,642,224 1,592,290 Licenses and permits 151,600 153,032 Other revenue Gain (loss) on disposal of tangible capital assets - ) 34,670,463 36,217,193 39,265,145 Expenses (note 16): Legislative 504,400 477,619 Administration 4,30 4,130,921 Corporate safety services 296,975 Fire and by-law enforcement 1,457,435 1,297,464 1,452,592 Disaster and emergency services 219,436 Roads, streets, walks and lighting 11,790,754 1 Airport 129,352 120,979 123,604 Water and waste water 2,691,633 2, 2,123,647 Waste management 309,420 313,249 306,155 Family and community support 65,466 64,467 64,466 Municipal planning 560,731 495,112 526,626 Community and agricultural services 1,600,315 Subdivision land and development 336,597 173,915 363,370 Recreation and parks Culture and library 154,470 154,470 152,759 Other 3,677,603 3,093,711 27,467,154 26, Annual surplus before the undernoted 6,166,967 750,039 12,420,299 Other: Contributed assets - 904,423 13,407 Insurance proceeds - - Government transfers (note 15) 3, 16,044,107 Other - - 743,615 Annual surplus 9,749,309 13,523,021 Accumulated surplus, beginning of year Accumulated surplus, end of year $ $ $275 The accompanying notes are an integral part of these consolidated financial statements. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 33 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Change in Net Financial Assets December 31, 2016, with comparative information for 2015 Budget 2016 2015 Annual surplus $ 9,749,309 $ 13,523,021 $ Acquisition of tangible capital assets (12,177,100) (11,733,660) Contributed tangible capital assets - (710,756) (13,407) Proceeds on disposal of tangible capital assets - 70,432 Amortization of tangible capital assets 5,744,761 (Gain) loss on disposal of tangible capital assets - 7, Use (acquisition) of inventories for consumption - (414,619) Use (acquisition) of prepaid expenses - (4) Change in net financial assets 26 Net financial assets, beginning of year 52,365,506 52,365,506 Net financial assets, end of year $ $ 60,214,332 $ 52,365,506 The accompanying notes are an integral part of these consolidated financial statements. Photograph by C. Shaffer P AGE 34C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Consolidated Statement of Cash Flows Year ended December 31, 2016, with comparative information for 2015 2016 2015 Cash provided by (used in): Operations: Annual surplus $ 13,523,021 $ Items not involving cash: Amortization 5,744,761 Contributed assets (710,756) (13,407) (Gain) loss on disposal of tangible capital assets Change in non-cash financial assets and liabilities: Taxes and grants in place of taxes receivable (235,672) 211,561 Trade and other receivables 2,939,662 (12,763,023) Land held for resale 390 Other financial assets (5) (1,655) Prepaid expenses (4) Inventory for consumption (414,619) Accounts payable and accrued liabilities (1,327,345) (236,131) Employee benefit obligations 1,123,213 (10,336) Unearned revenue 13,701 (1,259,477) Landfill closure and post-closure costs (4,369) (12,565) Gravel pit closure and post-closure costs (15,254) 22,006,375 20,795,716 Capital activities: Proceeds on disposal of tangible capital assets 70,432 Purchase of tangible capital assets (11,733,660) () (24,722,017) Investing activities: Decrease (increase) in temporary investments (15,300,412) 7,956,675 Increase in investments () (6,423,046) Payments received on notes receivable 1,221,429 2,363,010 Financing activities: Repayment of long-term debt: - operating (709,366) - capital (4,942,931) (3,777,394) Proceeds from debt acquired - 6,000,000 Increase (decrease) in deposit liabilities (45,117) 10,299 (5,697,414) 1,560,520 Increase (decrease) in cash and cash equivalents (13,623,211) (2,771) Cash and cash equivalents, beginning of year 16, Cash and cash equivalents, end of year (note 2) $ 2,995,636 $ Cash and cash equivalents is comprised of: Cash and temporary investments $ $ Less investments with original maturities greater than 90 days 412) $ 2,995,636 $ The accompanying notes are an integral part of these consolidated financial statements. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 35 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 1. Significant accounting policies: The consolidated financial statements of the County of Newell (the ÐCountyÑ) 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. P AGE 36C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 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. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 37 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 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. P AGE 38C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 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 managementÓs estimate of the cost of post-remediation including operation, maintenance and monitoring. No contaminated sites have been identified. 2. Cash and cash equivalents: 2016 2015 Cash $ 2,995,636 $ Temporary investments 196,412 $ 2 $ Included in cash are amounts aggregating $ (2015 - $243,991) not available for current use. 2016 2015 Tax sale surplus $ 12,769 $ 12,661 Public reserve 231,330 $ $ 243,991 Temporary investments consist of GICÓs that have an average interest rate of % (2015 Î 2.05%) and mature in periods ranging from June, 2017 to December, 2017. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 39 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 3. Taxes and grants in place of taxes receivable: 2016 2015 Current $ 599,967 $ 462,904 Arrears 794,415 695,06 1, Allowance for uncollectible taxes (100,000) (100,000) $ 1, $ 4. Trade and other receivables: 2016 2015 Grants $ 12,990,945 $ 16,144,745 Local improvement taxes 6,132,749 Other 1,064,159 $ $ 23,127,515 Local improvement taxes carry annual interest rates ranging from 2.64% - 7.125% and are due between 2017 Î 2041. 5. Investments: 2016 2015 Fixed income securities $ $ 42,177,933 Credit Union Common shares 5 5 Newell Regional Services Corporation: Common shares 20 20 Preferred shares $ 46,452,097 $ 42,262,136 Fixed income securities yield interest from 1.61% to 4.95% and mature in periods 2017 through 2027. The investments have an average expected yield of 2.50% and an aggregate market value of $46,757,445 (2015 - $). P AGE 40C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 6. Notes receivable: 2016 2015 Newell Foundation, repayable in annual installments of $ including int $ 1,537,922 $ Tilley and District Fire Association - 433,492 Newell Regional Services Corporation, non-interest bearing, maturing in 2017 235,715 $ 1,773,637 $ 2,995,066 7. Tangible capital assets: Cost 2015 Additions Disposals 2016 Land $ 5,353, $ -- $ -- $ 5,353, Land improvements (7,976) 2,037,162 Buildings 662,977 -- 19,160,729 Engineered structures () 210,653,643 Machinery and equipment (140,169) 11, Vehicles (75,133) 5,095,143 Work in progress, net of transfers 50,126,103 () Total $ 279,449,067 $ 12,444,416 $ () $291,174,700 Accumulated Amortization amortization 2015 Disposals expense 2016 Land improvements $ 701,541 $ -- $ 131,453 $ Buildings -- 317,605 1, Engineered structures 50,417,164 ) 54,467,144 Machinery and equipment 4,265,416 (100,303) 1,000,320 5,165,433 Vehicles 2,034,550 (66,735) 2,367,101 Total $ $ (495,476) $ $ 64,222,362 C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 41 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 7. Tangible capital assets (continued): Net book value 2016 2015 Land $ 5, $ Land improvements 1, 1,164,111 Buildings 17,771,039 17,425,667 Engineered structures 1 Machinery and equipment 6,720,104 7,063,152 Vehicles 2, 2,953,659 Work in progress 50,126,103 Total $ $ Contributed tangible capital assets are recognized at fair value at the date of contribution. The value of contributed assets received during the year is $710,756 (2015 Î $13,407) and has been included in buildings and land improvements. . 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: Recognized as Description 2015 Received revenue 2016 Street Improvement Grant $ 173,520 -- -- $ 173,520 Other 9,464 23,165 (9,464) 23,165 Total $ $ 23,165 $ (9,464) $ P AGE 42C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 10. Long-term debt Î operating: 2016 2015 Debenture supported with notes receivable $ 1,537,923 $ Principal and interest repayments are due as follows: Principal Interest Total 2017 $ $ $ 43,425 $ 1,537,923 $ $ 1,665,934 Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at 5.5% per annum, before Provincial subsidy, and matures in . Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $ (2015 Î $151,337). The CountyÓs total interest paid in 2016 was $123,601 (2015 - $). 11. Long-term debt Î capital: 2016 2015 Tax supported debentures $ 24,414,424 $ 29,357,355 Principal and interest repayments are due as follows: Principal Interest Total 2017 $ 5,034,630 $ $ 5,503,355 5,121,407 375,165 5,496,572 2019 5,496,572 2020 3,633,522 190,142 2021 Thereafter 2,944,606 195,626 3,140,232 $ 24,414,424 $ 1,632,230 $ 26,046,654 C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 43 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 11. Long-term debt Î capital (continued): Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 1.124% to 7.125% per annum, before Provincial subsidy, and matures in periods 201 through 2034. The average annual interest rate is 2.014% for 2016 (2015 Î %). For 11% to a maximum annual rate of 12.5%, depending on the date borrowed. Debenture debt is issued on the credit and security of the County of Newell at large. Interest on long-term debt amounted to $556,235 (2015 - $574,770). The CountyÓs total interest paid in 2016 was $560,422 (2015 - $). 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 CountyÓs landfill and closure and post-closure costs for the CountyÓs gravel pit s are based on an estimate of future discounted costs. All landfill sites are closed. One site is expected to be reclaimed in 2017, while post-closure costs associated on another are The estimated closure and post-closure costs for the landfill are $313,533 and $335,341 for the gravel pits, all of which have been accrued in the financial statements. The County has not designated assets for settling closure and post-closure liabilities. Photograph by R. Redelback P AGE 44C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 13. Accumulated surplus: Equity in tangible Unrestricted capital Restricted Total Total net assets assets (1) Surplus (2) 2016 2015 Beginning balance $ $192,025,553 $ $ $ Annual surplus 13,523,021 -- -- 13,523,021 Transfers to restricted surplus () -- -- -- Transfers from restricted surplus 10,345,331 -- (10,345,331) -- -- Amortization of tangible capital assets () -- -- -- Net book value of assets disposed 223,307 (223,307) -- -- -- Capital assets internally funded (11,309,063) 11,309,063 -- -- -- Capital assets debt funded (424,597) 424,597 -- -- -- Contributed assets (710,756) 710,756 -- -- -- Unexpended debt 424,597 (424,597) -- -- -- Debt paid - capital (4,942,931) 4,942,931 -- -- -- Total $ 1,505,734 $202,537,914 $ $ $ (1) Equity in tangible capital assets: 2016 2015 Tangible capital assets (note 7) $ 291,174,700 $ 279,449,067 Accumulated amortization (note 7) (64,222,362) () Long-term debt Î capital (note 11) (24,414,424) (29,357,355) Unexpended debt proceeds - 424,597 $ 202,537,914 $ 192,025,553 C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 45 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 13. Accumulated surplus (continued): (2) Restricted surplus is comprised of funds internally restricted as follows: 2016 2015 Paving $ $ 7,260,029 Infrastructure 19,921,173 Future Projects Vehicles, Machinery & Equipment 7,244,960 Regional Enhancement 3,390,161 3,390,161 Stabilization 5,762,969 Facilities 2,464,260 Fire Apparatus 3,224,453 Tilley 50,662 Unexpended Budget Appropriation 203,176 $ $ 14. Net municipal property taxes: Budget 2016 2015 Taxation: Real property taxes $ 15,567,293 $ $ Linear property taxes 27, 27, 27,461,535 Government grants in place of property taxes 43,267,310 43,457,274 Requisitions: Alberta School Foundation Fund 12,529,765 12,754,794 12,529,765 Newell Foundation 910,166 910,166 13,439,931 13,664,960 Net municipal property taxes $ 29, $ 29,792,314 $ P AGE 46C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 15. Government transfers: Budget 2016 2015 Transfers for operating: Provincial government $ $ $ 535,630 Local government 363,237 579,624 933,439 Transfers for capital: Provincial government 3,757,309 16,044,107 Local government - 111,250 - 16,044,107 $ 4,161,966 $ 4,504,557 $ 16,977,546 16. Expenses by object: Budget 2016 2015 Salaries, wages and benefits $ $ 7,430,179 $ 7,451,402 Contracted and general services 3,725,751 4,040,966 Materials, goods, supplies and utilities 4,954,203 3,9 3,966,506 Transfers to organizations 4,103,102 4,264,050 Bank charges and short-term interest 4,500 5,370 4,246 Interest on long-term debt 6 735,351 Other expenditures 20,000 Amortization 5,744,761 $ $ 27,467,154 $ C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 47 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 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: 2016 2015 Benefits & Salary (1) Allowances (2) Total Total Council: Division 1 $ 30,076 $ 5,071 $ 35,147 $ 30,275 Division 2 5,060 36,135 Division 3 35,470 36,624 Division 4 24,936 2,561 27,497 32,337 Division 5 33,114 33,076 Division 6 27,144 4,943 35,510 Division 7 5,003 33,522 34,127 26,707 1,393 33,213 Division 9 2,409 51,427 54,012 Division 10 27,079 4,940 32,019 32,126 $ 10 $ 41,450 $ 343,260 $ 357,435 Chief Administrative Officer $ 216,307 $ 49,294 $ 265,601 $ 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 employerÓs 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 employerÓs 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. P AGE 48C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 . 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: 2016 2015 Total debt limit $ 54,325,790 $ Total debt (25,952,347) (31,604,643) $ 2 $ 27,293,075 2016 2015 Debt servicing limit $ 9, $ 9, Debt servicing (6,336,321) (6,336,321) $ 2,717,977 $ 3,479,965 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. The calculation taken alone does not represent the financial stability of the County. Rather, the financial statements must be interpreted as a whole. 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 244,621 people and about 426 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 11.39% of pensionable earnings up to the yearÓs maximum pensionable earnings under t he Canada Pension 4% on pensionable earnings above this amount. Employees of the County are required to make current service contributions of 10.39% of pensionable salary up to the yearÓs maximum pensionable salary and % on pensionable salary above this amount. Total current service contributions by the County to the LAPP in 2016 were $613,239 (2015 - $609,423). Total current service contributions by the employees of the County to the LAPP in 2016 were $565,546 (2015 - $). At December 31, 2015, the LAPP disclosed an actuarial deficiency of $923 million. C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 49 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 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) Related party transactions: This section provides guidance on the definition of a related party and establishes the disclosure requirements for transactions between related parties. This standard is effective for fiscal years beginning on or after April 1, 2017. P AGE 50C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 21. Recent accounting pronouncements: (d) 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. 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. Photograph by S. Plett C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 51 CONSOLIDATED FINANCIAL STATEMENTS COUNTY OF NEWELL Notes to Consolidated Financial Statements Year ended December 31, 2016 23. Budget information: The budget information presented in these consolidated financial statements is based upon the 2016 budget approved by Council on March 24, 2016. 24. Approval of financial statements: These financial statements were approved by Council and Management. Photograph by C. Shaffer P AGE 52C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT SCHEDULE OF SEGMENTED DISCLOSURES COUNTY OF NEWELL Schedule 1 Schedule of Segmented Disclosures Year ended December 31, 2016, with comparative information for 2015 Public Works Public Works General and Total General and Total Government Transportation Public Utilities 2016 Government Transportation Public Utilities 2015 Revenue Net taxes for municipal purposes$ 29,792,314$ - $ -$ 29,792,314$ $ -$ -$ Special levies 311,243 - - 3,460,453 User Fees and sale of goods 530,515 257,732 997,241 Government transfers - operating - 105,000 749,745 - 933,439 Penalties and costs of taxes - - - - Investment income 1,642,224 - - 1,642,224 1,592,290 - - 1,592,290 License and permits 153,032 - - 153,032 - - Other 496,641 97,925 174,195 555,660 67,732 559,935 Gain (loss) on disposal of capital assets 10,301 - (77,612) 33,652,123 192,477 2,372,593 36,217,193 33,030,326 5,123,711 39,265,145 Expenses Salaries, wages and benefits 2,539,515 - 7,430,179 - 7,451,402 Contracted and general services 3,725,751 4,040,966 Materials, goods, supplies and utilities 1,243,977 750,333 1,231,125 711,522 3,966,506 Transfer to Organization 4,241,371 - 22,679 4,264,050 - Bank charges and short term interest 5,370 - - 5,370 4,246 - - 4,246 Interest on long-term debt - 556,235 - 574,769 735,351 Other expenditures - - - Amortization 990,695 4,336,601 4,127,291 5,744,761 10,427,914 2,913,144 27,467,156 10,629,544 Annual surplus (deficit) before the undernoted 19,526,025 (10,235,437) (540,551) 2,693,907 12,420,299 Other Insurance proceeds - - - - - - Contributed assets 904,423 - - 904,423 - 13,407 - 13,407 Government transfers - capital - - - 15,523,524 16,044,107 Other - - - - - - 743,615 743,615 Annual surplus (deficit)$ $ (10,235,437)$ $ 13,523,021$ 20,321,511$ $ $ Photograph by C. Schaffer C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 53 Photograph by D. Nyberg P AGE 54 SECTION 4 STATISTICAL SECTION C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 55 STATISTICAL SECTION Demographics & Other Statistics 7,524 2,959 2,996 3,033 3,073 Area in hectares 623,537 619,600 619,600 619,600 619,600 Continuous full-time employees 55 60 61 63 65 Debt supported by property taxes17,115,017 27,134,749 29,357,355 24,414,424 Debt supported by notes receivable4,479,144 2,919,673 1,537,923 3,4014,210 3,449 21,011,05923,396,133 13,523,021 221,455,146 Net financial assets 42,553,30340,412,495 52,365,506 60,214,332 Permits Issued: 90 76 9494 Building Permit 202 169 163202 Electrical Permit 97 92 64 Gas Permit 51 56 63 69 Plumbing Permit 21 2221 22 Private Sewage Permit 445 393 431 479 420 Photograph by F. Bexte P AGE 56C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT STATISTICAL SECTION Expenses by Object EXPENSES20122013201420152016 YEAR ENDED DECEMBER 31st Salaries, wages and benefits$ $ $ $ 7,451,402 $ 7,430,179 Contracted and general services 3,251,416 4,949,447 4,040,966 3,725,751 Materials, goods, supplies and utilities 3,156,794 4,007,534 3,966,506 Transfers to organizations 2,530,290 4,177,337 4,264,050 Bank charges and short-term interest 596 4,246 5,370 Interest on long-term debt 442,926 639,649 700,535 735,351 Other expenditures 125,926 54,114 Amortization 4,422,416 5,744,761 TOTAL EXPENSES BY OBJECT$ 20,101,723$ $ 25,930,641$ $ 27,467,156 Significant items driving variances in total expenses trends across the period include: Salaries, wages and benefits: FTEÓs increase d from 55 in 2012 to 65 in 2016; Contracted and general services: Reclamation of old public works yard in 2013 & 2014 ($300 thousand); Assessment of IT ; Contracted water meter installation project in 2013 ($40 thousand) & 2014 ($32 thousand); Materials, goods, supplies and utilities: Construction of water line to Dinosaur Provincial Park (non-TCA) in 2013 ($64 thousand) & 2014 ($359 thousand); Water meters for meter installation project in 2013 ($64 thousand) & 2014 ($62 thousand); Utilities increased with move to new facilities in 2013 by approximately $73 thousand per year; Transfers to organizations: Transfers of insurance proceeds on the Duchess Soccer Centre to the Village of Duchess in 2013 ($1.4 million), 2014 ($63 thousand) and 2015 ($1.1 million); Other expenditures: $1.1 million employee sick time liability arising from a policy change in 2016; Amortization: Total cost of tangible capital assets has increased from $203 million in 2012 to $291 million in 2016 which has led to the increasing annual amortization expense. $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Salaries,wagesContractedandMaterials,TransferstoBankchargesInterestondebtOtherAmortization andbenefitsgeneralservicesgoods,suppliesorganizationsexpenditures andutilities 20122013201420152016 C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 57 STATISTICAL SECTION Expenses by Function EXPENSES20122013201420152016 YEAR ENDED DECEMBER 31st Legislative$ 433,035$ 456,097$ 494,612 $ 477,619 $ Administration 3,592,537 4,130,921 Corporate safety services 251,127260,472 296,975 Fire and bylaw enforcement 1,060,690 1,452,592 1,297,464 Disaster and emergency services 145,619 197,126 Roads, streets, walks and lighting 9,722,194 Airport 92,701 123,604 120,979 Water and waste water 1,376,277 2,123,647 Waste management 306,155 313,250 Family and community support 64,466 64,466 64,466 Municipal planning 526,626 495,112 Community and agricultural services 1,300,551 1,600,315 Subdivision land and development 265,710 342,342 363,370 173,915 Recreation and parks Culture and library 151,400 152,759 154,470 Other 2,600,013 1,469,629 3,093,711 3,677,604 TOTAL EXPENSES BY FUNCTION$ 20,101,723$ $ 25,930,641$ $ 27,467,156 P AGE 58C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT STATISTICAL SECTION Revenues by Source Revenues by Source REVENUES20122013201420152016 YEAR ENDED DECEMBER 31st Net municipal property taxes$26,174,091 $29,792,314 Special levies 711,4652,045,909 User fees and sale of goods 1,666,294 Government transfers 1,073,512933,439 Penalties and cost of taxes 250,591 Investment income 1,736,9931,541,3431,654,2401,592,2901,642,224 Licenses and permits 166,302153,032 Other revenue 1,565,7152,061,463 Gain (loss) on disposal of tangible capital assets (123,751)365,342(5,403) Operating revenues 35,375,534 39,265,145 36,217,193 Other: Insurance proceeds - 1,450,000 62,969 - Contributed from other local government - 2,795,262 - - - Contributed assets - - 13,407 904,423 Government transfers 9,710,706 16,044,107 Other - - 2,006,616 743,615 - 10,773,330 TOTAL REVENUE$ $ $49,326,774 $57,142,957 $40,990,175 Property taxes continue to be the most significant source of revenue for the County, comprising from total operating revenues over the period illustrated 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 2013, 2014 and 2015 for the Duchess Soccer Centre which was destroyed by fire; Contributed assets from the dissolution of the Village of Tilley in 2013; 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. Photograph by M. Marshall C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT P AGE 59 Photograph by M. Slomp P AGE 60C OUNTY OF N EWELL - 2016 A NNUAL F INANCIAL R EPORT