Province withholds funds from tardy Brandon

BRANDON -- Manitoba's second-largest city has not prepared a financial statement for the public, audited or otherwise, since its current mayor and council were elected in the fall of 2010.

Despite the fact Brandon's city council has passed two budgets and spent approximately $250 million in public funds since that time, there is no paperwork which would enable the public to ascertain how the city's finances have been managed over the past three years, nor its current financial condition.

Mayor Shari Decter Hirst is the city's chair of the audit and finance committee. In a written report delivered to Brandon city council Monday, she states "The objective is to have 2010 year-end wrapped up by this fall and 2011 by year-end depending on availability of auditors."

That's a best-case scenario that ignores the law and some important facts.

Under the Municipal Act, every municipality must submit a financial statement for each year to the local government minister by no later than March 15 of the following year. An audited financial statement must then be provided to the minister and mayor before the end of June.

The mayor must table the auditor's report at the first regular meeting of the council after receiving the report and "the municipality must without delay, after the report is tabled, give public notice that the report and the municipality's financial statements are available for inspection by any person at the municipal office during regular business hours."

A person who fails to comply with any of those requirements "is guilty of an offence and is liable on summary conviction to a fine of not more than $5,000, and in default of payment, to imprisonment for not more than three years."

Those aren't the only consequences that can flow from failing to file the financial statements on time.

Naline Rampersad, spokeswoman for Local Government Minister Ron Lemieux, told me "the province withholds gas tax payments to municipalities where statements have not been submitted, in accordance with agreements. In this particular case, we are withholding approximately $2.65 million in gas tax payments to the City of Brandon because they have not filed their 2010 or 2011 audited financial statements."

The fact the provincial government is withholding almost $3 million in gas tax grants -- representing more than four per cent of Brandon's annual operating budget -- is conspicuously absent from Decter Hirst's report to council. It comes as a shock to some who sit at the council table.

In interviews, a number of city councillors said they were not aware the province was withholding funds.

"If I had known, I certainly would have asked questions about it," Coun. Jim McCrae said.

"We absolutely, in no way, were told that this money was being withheld", said Coun. Stephen Montague, who serves on the audit and finance committee. "I'm hearing this for the first time from you."

"This is news to me" says Shawn Berry. "Somebody at city hall knows the money was being held back, but we weren't told. This has a huge impact on the city's finances and we've been kept in the dark."

The audit and finance committee has a number of excuses for the delay.

They blame changes to Public Sector Accounting Board standards, but those rules apply to all Manitoba municipalities and they are completing their financial statements on time.

They blame the city's new accounting system software, but the rest of the city's accounting system (taxes, water accounts, payroll -- the components that make up the contents of a financial statement) is running fine.

They blame the "high water event in 2011," but that is the least credible excuse of the three, in that it could not impact the 2010 financial statement and other municipalities affected by the 2011 flood have completed their financial statements on time.

Both the R.M. of Cornwallis and the City of Portage La Prairie filed their 2011 financial statements ahead of schedule.

The financial disclosure rules in the Municipal Act exist for a reason. They enable citizens and the province to exercise oversight of the manner in which municipal councils are managing the financial affairs of their municipalities. It is a crucial element of transparency and accountability.

That's great in theory, but how effective are those requirements if there is no realistic likelihood of prosecution for their violation, and if the withholding of millions of dollars does not produce immediate results?

Beyond that, how can Brandonites hold their elected representatives to account if they are denied access to financial documentation they are legally entitled to?

How is Brandon's city council expected to manage the city's finances, including the setting of budgets and monitoring the city's financial condition, if important information is withheld from them?

Those are all great questions. What's missing are answers.

Deveryn Ross is a political columnist living in Brandon.

deverynrossletters@gmail.com

Republished from the Winnipeg Free Press print edition July 12, 2012 A10