The city’s major investment portfolio grew by 6.21 per cent in 2020, joining general financial markets that rebounded from a steep dive last March when the pandemic set in, though local funds were outperformed by the market benchmarks.
The City of Medicine Hat’s year-end financial report states the value of investments with AIMCo. was $209.8 million as of Dec. 31, 2020.
That’s $26.6 million more than has been deposited with the Alberta Government’s financial management agency over the last four years.
The return for 2020 exceeds the city’s stated goal for the funds to return four per cent above general inflation (CPI for the year was 1.62 per cent), but comparable funds the city uses to benchmark performance returned 11.56 per cent as the stock market reached record highs late in the year.
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For a long time, Alberta has benefitted greatly from oil and natural gas royalties. Today, the resource revenue, while still sizeable, is no longer adequate to support the lifestyle to which Albertans have become accustomed.
Fifty years ago, then-premier Peter Lougheed forecast that this day might come and set up the Heritage Savings and Trust Fund to get us through times like this. If our political leaders over those 50 years had stuck to the rules, raised taxes modestly and kept their hands off of the piggy bank, Alberta would have been in an excellent financial position today. But we aren’t.
Power sale could mean stable endowment fund
Poll
Do you agree with the city’s decision to collapse certain advisory boards into one, nine-member Community Vibrancy Board?
Yes
Local administrators and elected officials say proceeds from any potential sale of the power plant could lead to an endowment fund providing more stable income and less risk to the city.
That’s led to questions about what such a fund would look like, how it would operate and how it could be safeguarded to provide stable income far into the future.
Some opponents have expressed doubts, stating forgone operating revenue in the sale-fund model makes it less attractive.
If Peter Lougheed had been confronted with COVID-19, he would have likely responded in a very different way than what we are currently seeing, according to political scientist Duane Bratt.