By Mark Squibb \ May 18, 2023
The City of Mount Pearl may invest up to $10 million in unused funds in the hope of some financial returns.
Council unanimously approved the motion this week during its regular public meeting.
“City staff conduct a continuous review of the City’s financial position that includes a review of forecasted expenditures and cash flow,” said Deputy Mayor Nicole Kieley. “In the budget process, the City budgets the money required to fund all operations and planned capital. And so over the course of time, as budgets are allocated, not all expenditures occur in the year in which they are budgeted which results in allocated but unspent City funds. And so, in reviewing the City’s current financial position, additional consideration has been given to ensuring these funds are working harder for taxpayers. The City has a responsibility of course to its taxpayers to limit the risks taken with public dollars. Right now, legislation, of course, limits investment risk and guides investment toward high‐quality, secure investments that will contribute to the fundamental goal of preservation of capital. So, in considering investment vehicles, the City must balance investment risk against potential investment returns, while still meeting the daily cash flow demands of the City.”
Kieley then put forth a motion that the City invest up to $10 million in allocated but unspent funds in guaranteed investment certificates to “ensure that allocated but unspent cash is working harder to fund City expenditures on behalf of taxpayers.”
Mayor Dave Aker said the motion doesn’t mean necessarily that City will be investing $10 million, but only that it has the ability to do so.
“This is the cap, this is not the transaction,” said Aker. “This is just the policy that enables staff. This is council providing the authority to the CAO and to the Director of Corporate Services to provide for better returns on idle cash.”
Aker reiterated the money will be invested in risk free investments, and pointed the finger at high interest rates as a motivation for the motion.
“Frankly, interest rates are not at an all time high, but they are perhaps the highest they’ve been in 20 years, and so it’s incumbent on us to capture any value there,” said Aker.
