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Municipalities aren't immune from political and bureaucratic blundering, but when they occur the damage is usually measured in the thousands. Occasionally though, small towns and cities join the big leagues. Such is the case in our sister city to the east where taxpayers are on the hook for over $20 million in debts at their local telephone company.

it changes the phone company books from black to red overnight, and could force it to default in turn on its debt to the city.

Reading between the lines of an explanatory letter from city manager Joe van Koeverden, the reason for the losses can be traced to a bad choice. When the utility set a course to grow its cellular service in 2008 it picked the wrong technology. Something that was to be "somewhat future proof" in Nike Kyrie Cool Grey the rapidly changing world of wireless communications fell well short of that, requiring major unplanned expenditures to replace newly installed equipment with yet more newly installed equipment. That boosted expenditures far higher than planned, expenditures financed through cash from the telephone division and a $12 million provincial infrastructure loan secured by the city in 2010.

Financial statements detail debt crisis at Dryd

carried as a liability on the utility books.

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While the city's core telephone and internet business remains modestly profitable earning $325,000 last year on revenues of $4 million, Dryden Mobility, the cell phone division, is awash in red ink, posting a loss of $3.66 million on revenues of $3.43 million last year. Cumulatively the division has racked up losses of $8.345 million over the past four years.

Despite the city's assertion that its century old main phone company remains a solid business, it is teetering like a house of cards. While the books say the phone company has retained earnings of $3.5 million, there's no real money to settle its account with the city the assets are all non cash, mainly buildings and equipment. As well, since the cellular division is in such trouble, the core phone company has been carrying an interlocking $11.142 million debt for services and cash advances as an amount due from a related party on its books to offset what it owes the city.

Because the city hasn't received real dollars for some time, it has used ledger entries to keep its own books balanced. In total, most of the $7.95 million in dividends since 2003 are now on the books, with interest, as a $9.75 million IOU.

Dryden taxpayers have every right to be asking hard questions. And they need straight answers, not feel good assurances.

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If the cellular division defaults on that, Nike Zoom Flight 96 Iverson

Compounding this, the hoped for surge in customers from expanding cell service south to Fort Frances, north to Sioux Lookout and Red Lake and east to Sioux Narrows didn't occur, making revenues much less than forecast.

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help fund municipal expenditures, the city takes a dividend payment from its co joined telecom utilities each year. From 2009 to 2011 it was $1.25 million annually, in 2002 and 2003 it was $450,000. The latter is an important date because 2003 was the last year the joint utility truly operated in the black, with cash left over after the city dividend a modest $58,561. In 2002 it had $450,000 left after the dividend payment.

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Nike Kyrie Cool Grey

It is not surprising civic officials were reluctant to share the information with the public it had nothing to do with the need for protecting commercial interests as they'd stated in the past. Rather, it had everything to do with avoiding hard questions on how a once profitable city business had become a major money loser.

Each year after 2003, as council set an ever increasing dividend, it came from retained earnings and when those were quickly depleted it was Nike Lebron 12 Bhm Ebay

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Nike Kyrie Cool Grey

When you think of boondoggles, visions of federal job creation schemes gone awry, or the gun registry come to mind. At the provincial level, Ontario has its eHealth and Ornge scandals. These all came with billion dollar price tags, or at least multi million dollar ones.

The second cause behind the sorry state of the utility's books can't be excused as easily, it was clearly a political decision and one made solely by past and present city councils.

All this debt is backed by a business operation that's not made a true profit in a decade.

What are the chances of a turn around for Dryden Mobility? At what point does the city decide, if it must, that it is throwing good money after bad and cut its losses sell the mobility assets and take whatever write downs or write offs are needed at the core telephone company and on the city balance sheet?

The bottom line for Dryden taxpayers is an accounts payable amount of nearly $10 million from its telephone company that is going to grow by another $1 million when the 2012 dividend comes due, and grow even further with the nearly $400,000 in interest accruing on the outstanding balance. Along with that there's $11 million remaining on the provincial loan the city guaranteed for the cellular company, plus the $8.3 million operating deficit, which according to the audited statements, would not be fully recovered if the cellular company or assets were sold.

After several years of rumours and a year of mounting pressure, Dryden council made public the utility's financial statements for 2011, and accompanied those with full city financial statements dating back to 2003.

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Picking the wrong technology in the rapidly changing mobile phone and data service industry can be chalked up to bad luck, opting to continue taking an annual dividend from a business that's operating in the red is just plain dumb.

Council basically sucked the utility dry over the past decade, taking far more out of its coffers each year than was actually earned in hard cash.

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An outside consultant was retained last year and a new strategic plan developed to turn the cell service around, according to van Koeverden.

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