Written by Chris Majerle, PCAM on August 14, 2020
Community Management Edition
Snow and other variables pose the most difficult budget challenges. To some degree, the answer is, “Guess!” But, there is a better answer: budget for the average. But there’s another important step. Create a contingency reserve for leftover snow funds.
In the Washington-Baltimore area, we get about 17″ to 20” of snow annually in 4 to 6 events. Of course, most of us recall 2010 when some of us got over 70″. We have had years of abnormally-high snowfall totals and we have had others with almost none.
Skip this next paragraph unless you’re a weather nerd…
El Niños are measured in terms of Pacific temperature deviation from the norm. NOAA has been tracking this only since about 1950, so the data is minimal and that could make the findings less reliable. NOAA says El Niño “tilts the odds,” rather than emphatically stating that it has an absolute effect. A strong El Niño brings lots of moisture to California, the South, and the Mid-Atlantic, but if it’s too strong, it also brings warmer temps. A moderate El Niño is where we panic… lots of moisture, but not a lot of warm air. A normal Pacific temperature variation would be 0 degrees. 2 degrees is considered a very strong El Niño. One of the strongest was January 1998 at a variation of 2.1, which resulted in DC getting 0.1″ of snow–our lightest snowfall since El Niño records have been kept. Our recent 2010 “snowmaggeddon” brought DC 56.1″ of snow with a moderate El Niño of 1.3. An exception was 1982-1983 when we had our second strongest El Niño and a 21″ storm that ranks in the top 10 for our region. Current forecasts for the coming winter are that El Niño will approach or exceed 2.0. Unlike the usual strong El Niño, NOAA has us at a slightly greater chance of being cooler than normal, but right on the edge. (What else would you expect for DC?)
And, of course, you can place your trust in the Farmer’s Almanac. It’s right almost 50% of the time!
What To Do About It
If you get in the practice of budgeting for the average AND you do not divert surplus snow removal funds to other areas, over time you will accumulate the funds to handle another snowmageddon. MMI recommends establishing a contingency (or operating) reserve fund for this purpose. In years of low snow expenditures, set-aside the excess in this operating reserve. Then, in years of extreme snow totals, draw on this fund to supplement your snow budget. Following this process will take the worry out of winter weather budgeting and the impact of severe winters.
But, what about the near term while you save? Although you can’t trust the weather forecast for the upcoming weekend, meteorologists keep trying to give us long-range forecasts. These are generally published or televise in November. By then, you probably have your next year’s budget done. What you can do now is budget for normal AND budget to start funding a contingency reserve. Funds transferred to the contingency reserve remain operating and can be transferred back if you must, but if you start with 1% or 2% of your gross revenue going into the reserve now, it will be that much less pain should the bad winter come sooner rather than later. The best thing you can do right now is to accept that there will be another year of blizzards in our area and recognize that years of little or no snow are your chance to better prepare; not to use the savings to lower assessments or catch-up on maintenance. Snow funds should remain earmarked for snow.