Pay back money owed, Perth tells township
Posted Mar 11, 2010 By Chris Must
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Tweet ThisEMC News - Perth town councillors have voted to reject a request from Drummond/North Elmsley Township to waive a portion of the funds owing to the town of Perth due to a miscalculation in the cost-sharing agreement between the three municipalities which support the Perth Union Library's annual budget.
Following some discussion at a meeting of council's Committee of the Whole March 2, a majority of councillors voted to ask Drummond/North Elmsley to make good the underpayment of its share of the library budget, which dates back to 2003, and to give that municipality three years to correct the inequity. Mayor John Fenik and councillor Bill White voted against the motion. This repayment plan, to receive approval at the regular monthly council meeting March 16, will be subject to Drummond/North Elmsley and Tay Valley townships accepting the arrangement.
The annual library budget is divided between the three municipalities of Perth, Drummond/North Elmsley and Tay Valley subject to an agreed-upon cost-sharing formula. In a report to Committee of the Whole, Perth Director of Corporate and Environmental Services Jorgen Hoeven explained that town staff discovered in 2006 that the cost-sharing arrangement was not being applied correctly due to a failure to adjust for annual changes in tax assessment. As a result, Perth has paid a total of $26,371.56 more than its share of the library budget, due to underpayment by Drummond/North Elmsley.
"This isn't about the library's levy being incorrect, it's how it was divided up that was incorrect," said Hoeven.
In his report, Hoeven said the library owes Perth $26,371.56 and Tay Valley $18,339.33, while Drummond/North Elmsley has underpaid the library by $44,710.89. "Staff recommend settling these adjustments over three years, to mitigate the negative budget impact to D/NE, as long as all partners agree to this phase-in period," he advised.
The town finance department began working with township staff on a reconciliation process in 2006, when Hoeven noticed that the cost-sharing agreement was supposed to be adjusted annually for tax assessment values, rather than using a fixed percentage split.
Hoeven's report to the committee states: "It should be emphasized that the three contributing municipalities have over or underpaid the library, not each other. The library ultimately has responsibility over invoicing their annual levy to each municipality - the town of Perth had undertaken to set up the cost-sharing spreadsheets and enter the assessment data on behalf of the library (and the townships) due to their lack of available staff resources, and an awareness that it was in the town's interest to correct an expected overpayment of the town's share."
Perth Mayor John Fenik and Tay Valley Reeve Keith Kerr received a letter dated Jan. 25 from Drummond/North Elmsley Reeve Aubrey Churchill requesting "your consent to waive the outstanding amounts owing to the Perth and District Union Library Board for the years 2003 to 2007, as identified by the Town of Perth." In his letter, Churchill said the township would agree to have its share of the budget re-evaluated for the years 2008 and 2009, and proposed to add the re-evaluated amount to Drummond/North Elmsley's share of the 2010 library levy while reducing the other two municipalities' share by the credit portion.
In his report, Hoeven said that waiving the adjustments for 2003 to 2007 would result in Perth and Tay Valley receiving credits of $10,816.54 and $7,629.94 respectively, while Drummond/North Elmsley would owe to the library an underpayment of $18,446.48. The town treasurer said he would not recommend accepting this option because it would result in lost revenue to the town of $15,555.02, Tay Valley would lose $10,709.39, and Drummond/North Elmsley would receive a waiver of $26.264.41.
'UNEXPECTED BURDEN'
At the same time, Hoeven said he would not recommend repayment of the entire amount owing to Perth by Drummond/North Elmsley in 2010, because "this would represent an unexpected and significant burden on D/NE."
Under the option he recommended, and which the committee voted to adopt, the town's and Tay Valley's overpayment would be credited back in each of 2010, 2011, and 2012 for $8,790.52 to Perth and $6,113.11 to Tay Valley, while Drummond/North Elmsley would pay their underpayment back to the library in each of the same years by $14,903.63 a year.
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