Westlock County’s transportation budget is almost $1 million over budget due to gravel costs.
The news that the county is $981,800 over budget came to council’s attention in a financial report presented at its Dec. 13 meeting.
The municipality had budgeted $4.8 million for transportation in 2016, but overages in gravel expenses skyrocketed to $5.8 million, meaning the county could run a deficit next year.
“I would suspect that we’re going to have a deficit,” director of corporate services Diane Urkow said at the meeting.
“I don’t know how much it’s going to be, it’s too early to predict, but I think it’s safe to say we will have a deficit.”
The key shortfall, she noted, is in transportation services.
“Gravel costs came in probably higher than what we budgeted,” she said.
“I don’t know what those numbers actually were, so it’s very hard to nail that down to a specific. As well, I think the conditions of roads required further gravelling.”
The information took a few councillors by surprise.
“When we’re $981,000 over budget in transportation services, doesn’t over expenditures have to come to council for a motion of council to authorize?” Coun. Bud Massey asked.
“It seemed to me that council is responsible for the taxpayer’s money. For surprises like this to come back to council and not be authorized by council is wrong. Not pointing any fingers at the current administration, but it would seem that they should have received this information months ago.”
Chief administrative officer Leo Ludwig said that was generally the process, although the overages occurred prior to his and Urkow being hired.
“I don’t know what process was followed and what information was provided to council,” he said.
Massey replied that the county’s former chief financial officer Sue Oberg had previously presented the information to council.
“(She) was asked by Coun. (Ron) Zadunayski if there were any surprises or any concerns of it being over budget, and the answer was a very definitive ‘No,’” he said.
But Zadunayski said this was not the first time the growing gravel expenditures were brought to council’s attention, although he didn’t identify when that had occurred.
“I find it unusual that we had our accountant here and she expressed concerns about our gravel costs,” he said. “She expressed concerns to council about our escalating gravel costs and it was kind of put aside. She had a concern, yet we didn’t catch it.”
However, Coun. Dennis Primeau noted that the overrun was allocated from reserves, but the problem may be that the money was never transferred over.
“Fundamentally, it should have been about $400,000 out of reserves moving into transportation,” he said. “Did that actually happen?”
Urkow said she wasn’t sure and asked if there had been a motion. The Westlock News could not confirm by publication if there was a motion passed at a previous council meeting.
“Council was forced to take the hit on that, or they were threatened with lawsuits and everything else,” Primeau responded. “Council was forced to access reserves for that, but the money hadn’t come from reserves (to) go into transportation, because transportation covered the whole cost out of that.”
Urkow said that financial statements from August did not indicate there would be a deficit in that budget line at the time.
“Most of the gravel costs maybe don’t hit our books until September/October, when we actually know what the gravel usage was from July and August — there’s that time delay — so from the financial side, we don’t necessarily see those numbers until they hit the books,” she said.
“So, the former CFO may not have known about some of those costs at the time and therefore wouldn’t have raised any red flags.”
She noted that gravel inventory requires further crushing, which may be reflected in increased gravel costs. Because uncrushed gravel sits in inventory until it’s used, it wouldn’t be counted as an expenditure until then.
“We should have better communication, so that we have a heads up when there’s going to be increased usage of gravel, so that we can give council a heads up and get approval for it,” she said.
