Suffering from a bad case of Essar-induced heebie-jeebies, Sault Ste. Marie City Council voted Monday night to put off developing a policy for spending surplus cash, seeing there almost certainly will be no leftover cash in city coffers to spend this year.
Councillors voted to defer development of a surplus policy until next year, when they will have a better idea of the outcome and effects of Essar Steel Algoma's insolvency proceedings.
Under a resolution approved by City Council on Monday night, any 2017 surplus, no matter how improbable, will be used to enhance the city's contingency reserve.
"The 2016 fiscal year so far has provided many challenges resulting in staff projecting a potential deficit for the year," City Treasurer and Chief Financial Officer Shelley Schell said in a report to Mayor Provenzano and councillors.
In its most recent budget, the city used both surplus funds and reserves to reduce the levy.
As a result, Schell said, "the city is now in a position where neither reserves nor surpluses will be available in 2017."
Schell described the chances of a budget surplus as "negligible."
Essar Steel Algoma hasn't paid city property taxes since April 16, 2014 and owes the City of Sault Ste. Marie more than $20 million on its Wallace Terrace steelmaking site.
Ward 3 Councillor Matthew Shoemaker asked whether any consideration was given to developing a surplus policy now and holding it in abeyance until the dust settles on the steel mill's fiscal woes.
Schell responded: "Due to the current economic conditions in the city, I would recommend that it wouldn't be financially prudent in the short term to direct resources to anything other than the contingency reserve."
Schell said that she preferred to use short-term measures to manage city finances right now, developing long-term policies at a later time.
