October 20th, 2021

City’s write-offs released in annual report

By Collin Gallant on September 13, 2017.

Medicine Hat News

The amount of bad debt on the books at city hall rose slightly last year, but overdue utility bills dropped to its lowest level in five years, a committee heard Tuesday.

The annual accounting of write-offs and provisions was presented to the corporate services committee.

Those related to accounts receivable rose to $42,600, while utility accounts considered uncollectible sat at $154,500. It’s the second lowest amount in 10 years.

“There was a spike from 2008 to 2010, which was a result of the economy at the time,” said city finance general manager Dennis Egert. “Since 2012, the annual write-off amounts have been generally trending downward. The (small) spike in 2016 is a general reflection of the condition of the oil and gas industry.”

In 2009, the year after the global credit crisis, unpaid utility bills topped $300,000, but that figure dropped swiftly until another recession in 2012, when the number hit $250,000.

This year’s figure of $154,500 translates to about 0.12 per cent of the city’s $125 million in annual utility revenue.

The industry benchmark is between 0.13 and 1.5 per cent, according to officials.

The city’s advantage over private industry in that it can transfer utility balances on to property tax accounts. Those liabilities are typically one of the first debts paid in bankruptcy or if properties are sent to auction.

Related to Tuesday’s item, the city transferred $613,000 of utility debt onto tax accounts in 2016, down from $657,000 and $675,000 in the two previous years.

Administrators say that after attempts by the billing department and other city staff members to collect, debts can also be sent to collection agencies, or charged when customers attempt to set up another utility account. Some, in the case of bankruptcy or death, are considered unrecoverable.

“A lot of effort goes into collecting bills,” said committee chair Coun. Robert Dumanowski. “At some point though, you have to wipe them off the books.”

Specific to accounts receivable, $42,600 represents 0.27 per cent of the $15 million the city billed for products and services last year.

The unpaid largest portion, $23,800, is owed to the municipal works department, which unsuccessfully sought to recover funds after an out-of-town motorist damaged a light standard.

In another significant case, the city’s bylaw department was left with an $8,000 bill after it followed procedure to clean up an unsightly property by contracting the work then billing the owner. Shortly afterward, the respondent died.

Of the remainder, $2,200 relates to gas supply contracts, and the landfill, senior services, cemetery, permit office and airport were owed amounts ranging from $33 to $623.

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