Council to mull emergency spending authority adjustments

By Collin Gallant on November 16, 2024.

Council will debate new emergency spending protocols for “critical” components at the city’s power business.

The issue first arose this fall after staffers told council that an additional $4.1 million was spent in rebuilding a major gas-fired turbine this summer – work discovered at the repair facility in Taiwan, and which needed to be green-lit before the next council meeting weeks later.

It was retroactively approved in early October, though top staff and council members said better procedure should be developed.

On Thursday, city council’s corporate services committee received a new “budget amendment policy” that would give final authority in limited circumstances to the city manager to approve major, unforeseen spending with reporting requirements.

“It’s not a good situation, so we’ve defined what a critical repair is: when it’s not in the budget and is required quickly,” said managing director Dennis Egert. “Council needs to approve projects and how we pay for it. This is designed to ensure we’re clear on two things: Emergency purchases … and, new, a power plant critical infrastructure spending.”

If approved, a limited amount of equipment, specifically at the power generation complex, would be designated as critical to operations.

Any changes in work orders or emergency repair or replacements could be handled via a reallocation within the division’s capital budget, or, if more significant, by the city manager’s approval in agreement with division officials.

City manager Ann Mitchell said that system, along with reporting requirements, encourages sound decision making and financial oversight.

Councillors have said operating in the power business requires at times, high and unexpected spending not considered in regular rules and financial controls set down for cities. As well, simply raising contingency amounts for original budgets isn’t preferable as that ties up cash for other maintenance projects.

The alternative however, is having key equipment down longer, prolonging work and the potential for lost revenue and reliability.

“It’s beyond obvious why a decision has to be made,” said committee chair, Coun. Robert Dumanowski, who questioned staff on limits and a variety of situations.

“I’m happy there a policy that supports that, rather than having staff coming after the fact.”

Egert said Thursday the issue doesn’t fit well into general budget amendment procedures, which can take up to three weeks and require council approval at an open meeting, or rules governing natural disaster response.

Generally, budget amendments are required when any significant budget changes take place, when funding sources changes (like the addition of grant funding after the fact), or when the purchase or construction changes scope.

In the case of natural disaster, the declaration of a state of local emergency loosens spending authority processes to quickly approve overtime, buy supplies or engage contractors.

In general practice, the city manager already has some ability to shuffle amounts of money between over and underspent capital projects when there is no change in scope. An annual report on such changes is published each spring.

This summer, a planned life-cycle overhaul of an LM6000 generator (a $26-million engine) was scheduled and budgeted to cost $5.6 million, though the repair facility discovered the need for a new turbine and other replacements totalling $4.9 million more.

With the engine open, and taking up limited shop space, a decision was required immediately to proceed with the work.

“It’s designed so that we’re not caught up in bureaucracy when there is an emergency,” but lack of planning does not constitute an emergency, said Egert.

The department said last spring it needed to pre-approve some large maintenance work that would take place in 2025 and 2026 in order to book shop time and hard-to-procure components years ahead of time.

More items related to the 2027 power plant capital plan are included in the current two-year budget proposal now being finalized.

“We want to get these (future capital items) items into the regular budget and keep these out-of cycle approvals to a minimum,” said Egert.