Municipal Reserves & Surpluses (Case study) Part 2
Arcadia NB Case Study:
Here are the numbers for Arcadia, all available yearly audits and budgets.
The 2024 Audit and yearly budgets are posted on the municipal website (under “News”)
Referring to page 21 of the 2024 Audit:
Consolidated Schedule Reserve and Trust Funds (Schedule 5).
| operational reserve | capital reserve | 2024 total | 2023 total | |
|---|---|---|---|---|
| Surplus – beginning 2024 | $313,523 | $2,387,401 | $2,738,239 | $1,957,899 |
| Transfers from (to) | $186,545 | ($138,750) | $47,795 | $723,001 |
| Interest earned | ($32) | $53,864 | $53,962 | $57,339 |
| Annual surplus (deficit) | $186.513 | ($84.886) | $101,757 | $780.340 |
| surplus, end of year | $500,036 | $2,302,515 | $2,839,966 | $2,738,239 |
| Assets | ||||
| Cash | $313,571 | $1,942,300 | $2,293,316 | $1,674,432 |
| Due from operating fund | $186,645 | $360,215 | $546,680 | $1,063,807 |
| Assets Total | $500,036 | $2,302,515 | $2,839,966 | $2,738,239 |
NOTE: not listed in this table is the Sewer Reserve;
it is at just over $37,900 and is reflected in the totals.
Council Resolutions - 2024
- It was moved and seconded to transfer a portion of the 2024 surplus from the Arcadia General Operating Account in the amount of $186,545 Io the Arcadia Operating Reserve Account
- It was moved and seconded to transfer a portion of the 2024 surplus from the Arcadia General Operating Account in the amount of $390,000 to the Arcadia Capital Reserve Account.
- It was moved and seconded to pay invoice #40052218 in the amount of $28,750 from the Arcadia General Operating Account, to be repaid by the Arcadia Capital Reserve Account.
- It was moved and seconded to transfer the amount of $500,000 from the Arcadia General Capital Reserve Account to General Operating Account.
This last transfer indicated ($500,000) was to pay for the fire truck: reviewing the 2024 approved budget: “ Cambridge Narrows Fire Department Truck Purchase”: Funds to be transferred from the Cambridge Narrows Capital Reserve.
We won’t see the reserve totals as of Dec 31, 2025, until the 2025 audit is completed (likely the end of this year); however:
Per the minutes of the Special meeting of December 30, 2025:
“It was moved by Councillor Black and seconded by Deputy Mayor Sharpe to transfer the 2025 surplus in the amount of four hundred and thirty-five thousand, nine hundred and seventeen dollars and no cents ($435,917.00) from the Arcadia General Operating account ending in 97-13 to the Arcadia Capital Reserve account ending in 70-18.
With all in favour, the motion was carried”
The budgeted transfer in the 2025 budget was $443,155. I presume that the motion of December 30,2025 pertains to this amount.
Fiscal Services - 2025
Transfers to Own Reserves, Funds & Agencies - General Capital Fund –
Specify (List Purpose for current year only)
| Line ID | 2024 | Adopted 2025 | Budget 2026 |
|---|---|---|---|
| 2.8.2.5.2 | $200,000.00 | $250,000.00 | $247,000.00 |
| 2.8.2.5.4 | $93,000.00 | $193,155.00 | $398,679.21 |
| Total | $293,000 (5.4%) | $443,155 (8.6%) | $645,679.21(11.9%) |
| Note: There was no descriptor on these line items as required |
- The 2024 total transfers to Reserves represents 5.4% of the 2024 budget
- The 2025 total transfer to reserves represents 8.6% of the 2025 budget
- The 2026 projected total transfer to reserves represents 11.9% of the 2026 budget
Adding the 2025/ 2026 budgeted reserve amounts to the 2024 audit numbers Arcadia has potential reserves as of the end of 2026, of approximately: $3,928,623.00
Note: The 2026 budget; under Revenue”, lists a “Transfers from Utility Fund” of $45,088. In 2025 it was $44,201.00 (unsure as to what this represents).
It should also be noted that at amalgamation, Arcadia started with reserves at over $2.8 million.
Bear in mind that amounts budgeted for reserves are not monies that will be used in the day-to-day operations of the municipality.
The $645,679.21 budgeted in 2026 does bump the operating budget up accordingly.
I would expect, like 2025, on Dec 30, 2026 council will approve a motion to transfer that sum to reserves as they did on December 30, 2025 with the $443,155 transferred to reserves.
These numbers will not show up in the yearly audits as a surplus, but rather an expense, as transferring the money to reserves equals “spending it” for audit purposes.
Google says: Municipalities need varying amounts for capital reserves, generally aiming for 25-50% of annual operating expenses for overall reserves, but more specifically funding infrastructure replacement through lifecycle costing to meet 90% of rehab/replacement schedules, often targeting asset replacement at 20% of current replacement cost or setting annual contributions based on long-term asset management plans, not a single universal number, but tailored to specific assets and needs.
I don’t know if this figure is representative of a reasonable amount for a Riverview, or a small community like Arcadia.
Other Examples:
- Sunbury York South (population - $8,000): 2024 audit – they had a total of $257,000 in reserves ($134,000 in capital, $122,000 in operational)
- Butternut Valley (5000 population) – they carry a $60,000 reserve ($50,000 in general capital/ $10,000 in general operating)
- New Maryland (4100 population) – They appear to carry11.6 million This includes 5.1 million for water and sewer (305,000 in Operational reserves / 6.1 million in Capital reserves.
Somewhat surprised as many of municipalities did not post their audited financial statements for 2024.
Surpluses:
The following surplus amounts are noted:
2023 - $ 80,317.00 (1.8% of 2023 budget)
2024 - $137,147.00 (2.5% of the 2024 budget
2025 - $435,917.00 (projected per Dec 30 minutes = 8.5% of 2025 budget)
Total: $653,391.00
Council chose to roll the surpluses of 2023 and 2024 over into the subsequent years budget, rather than returning same to the taxpayer in the form of a tax rate reduction.
Regarding the 2024 surplus and deliberations for the 2026 budget; from December 15, 2025 council meeting minutes:
- Question:
Councilor Mennier: Was there any consideration for a minor tax break for any of the wards?
Councilor Black: Consideration was given for a minor tax break for each of the wards. One ward was considered for a larger tax break, but it was unfair if one ward benefits over the other wards. With the delay in fiscal reform and surprise of the assessment freeze, we did not want to lower tax rates this year and then increase again next year if necessary.
All those in favour: Deputy Mayor Sharpe, Councilor Black, Councilor Mennier All those against: Councilor Gahan-MaGee
Motion was carried.
Despite the assessment freeze for 2026, the 2026 budget found approximately $300,000 in additional funds versus the 2025 budget. Even with the assessment freeze, Arcadia saw additional revenues. To be transparent, a portion of that $300,000 in additional revenue was the $137,000 surplus from 2024.
In 2024, there was a $137,000 surplus. Council also transferred $293,000 into reserves. Meaning there was some $430,000 that technically wasn’t spent on day-to-day expenses. That’s close to 10% of the 2024 budget.
These are your tax dollars (your hard-earned money) funding the operating budget and reserves.
Debt
At the end of 2026 Acadia will have twice the debt amount of $1.9 million in Reserves.
As of 2024 audit, Arcadia was carrying a debt of $1,910,000.
| Debt repayment amounts: | |
|---|---|
| In 2023 | $325,802 (6% of total budget) |
| For 2024 | $481,531(8.9%) |
| For 2025 | $ 381,445 (7.4%) |
| For 2026 | $305,916 (5.37%) |
| That totals $1,494,694 over 4 years in debt repayment |
| From the 2024 audit: | |
|---|---|
| loan matures on September 20, 2042 - (3.1% interest) | $1,047,000 |
| loan matures on December 12, 2032 – (2.6% interest | $189,000 |
| loan matures on May 14, 2034. – (2.1% interest) | $389.000 |
| loan matures on June 21, 2038. – (5.115% interest) | $285,000 |
| Total debt $1,910,000 |
There is no information as to how long the municipality has been paying on this debt or how much Arcadia will actually end up paying once these debts are fully paid. So, ultimately, we get to the questions:
-
Question: Why does Arcadia need close to $4,000,000 in reserves, bearing in mind the contemplated/ expected use of Reserves. Those amounts being stockpiled in reserves could mean lower budgets meaning potential lower tax rates.
-
Question: What should council be doing with surpluses and transfers to reserves moving forward? Look at the percentage of the total budget these amounts represent and what that might mean in terms of potential tax rate reductions?
-
Question: With 4 million in reserves can we do something with the debt. Paying that off eliminates $300,000 to $400,000 in debt cost per year, which could have an impact on the tax rate, with a still a heathy reserve remaining?
For example:
The tax rate in Sunbury York South (population 8000 ish): 0.80/100 for their Ward 1 and 0.83/100 for their Ward 2 for 2026; They were able to reduce the mill rate by 8.04% for their Ward 1 and 5.68% for their Ward 2.
Butternut Valley (population in the $4,000 range) was able to reduce their tax rate by 5.4 cents/ per $100. They pay 1.1736 per 10.
Important issues to think about as we move to the May general elections.