Norfolk County ends year with more than $9-million surplus

Norfolk County finished its 2022 fiscal year with a $9.35-million surplus.

But while the numbers are looking better, Norfolk officials say efforts to build “a solid and sustainable” foundation must continue.

“The audited 2022 financial statements clearly highlight the progress being made and the County’s improved financial position,” the county said in a Thursday statement. “Reserve balances are recovering from dangerously low levels (some negative!), and our year-end operating budget positions are contributing to favorable surplus balances to help that positive momentum.

“However, continued discipline and financial restraint are required.”

The county continues to face financial pressures fueled by inflation, raising debt servicing costs and aging infrastructure in need of replacement, the county’s statement said.

The statement follows approval of the county’s 2022 audited financial statements at a July 11 council-in-committee meeting. Councilors were provided a detailed report on the county’s finances, prepared by Kathryn Fanning, the county’s deputy treasurer, and Kevin Kitchen, the county’s supervisor, financial operations and internal audits.

According to the report, the county finished 2022 with levy operating surplus of just over $8.4 million. A couple of factors, including salary and benefit variances and COVID-related funding contributed to the surplus.

In addition, the county finished 2022 with a water and wastewater rate operating surplus of $920,000 bringing the total operating surplus to just over $9.3 million.

Staff recommended that the surplus be used to shore up various reserve funds.

Under the plan, which was endorsed by councilors, just under $3.4 million will be put into the county’s contingency reserve fund to reduce debt-funded projects. A further $3.1 million will be put into an uncommitted reserve fund.

The rest of the surplus will be distributed as follows:

Still, while councilors and staff are pleased with the progress being made with respect to the county’s finances, there are areas that need to be addressed.

The county is wrestling with a high level of outstanding and projected debt. That means councilors will have to make some decisions during budget deliberations about which projects should go forward and which ones will be put on hold.

And, even though the reserve fund balances have seen “much improvement” in recent years, they are still below ideal levels.

CAO Al Meneses reminded councilors that the county is projected to issue $461.4 million in debentures over the next 10 years. The debentures will be used to fund much-needed projects that can’t be covered by county reserves.

“Debt servicing will become an increasing challenge,” Meneses said in a report to councilors.

“Though financial improvements have been significant over the last number of years, the current financial statements do not signal the county is yet fully prepared for the financial future at this time, based on the projected needs,” Meneses said in his report. “Continued persistence and financial discipline will be required to build the financial reserves required to maintain, repair and replace significant assets that are aging and in need of replacement, while funding the efficient delivery of day-to-day services.”

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