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Bravery
From an imagined conversation between Premier Doug Ford and Mayor Steve Ferguson this past Monday.
“Thanks for the money, Doug Ford. Every little bit helps. And I really can’t imagine anything littler. This cheque is so puny that it won’t even cover the sales tax we’ll eventually have to pay on the infrastructure we have in store. In fact, we’ll likely end up sending you and your federal counterpart about $30 million in sales taxes on our planned spending extravaganza. But thanks anyway. Oh, and good luck with the by-election.”
When homebuilder Dave Cleave talks about the good old days in Wellington, he waxes poetically about the bravery of village elders who approved plans for a sewer system and treatment plant in the mid-70s. His comments to the council last month were meant to inspire similar bravery in the current council.
What Mr. Cleave fails to mention, however, is that the province paid the bulk of the cost for the pipes and pumps back then. The villagers paid just a small portion of the capital costs. Council bravery was easier when senior levels of government funded the lion’s share of municipal infrastructure in the good ole days.
It was understood that rural taxpayers couldn’t afford such big costs. That kind of thinking began evolving a couple of decades ago—coincidentally when provincial debts blossomed to become among the highest in terms of debt to GDP in the land.
For a while there, municipal infrastructure spending was divvied up three ways—municipally, provincially and federally— each level putting up a third of the capital costs.
That’s how Picton’s sewage treatment plant was financed a decade ago. Or that was the plan.
Despite revisionist history offered by a Toronto developer and folks who should know better, the sewage plant on the hill came in wildly over budget due to plain old mismanagement and some poor estimating skills by its consultants. The County had never built anything on that scale before. It was overwhelmed. Waterworks customers across Prince Edward County continue to pay the cost overruns for that debacle.
It was easier to be brave when the province paid the bill. It was tolerable when senior levels of government paid two-thirds of municipal infrastructure works. Sadly, as County manager Marcia Wallace observed recently, the days of 90/10 splits are over. That point was made humiliatingly clear on Monday.
With the offer of an $18.3 million grant on Tuesday, Doug Ford has flipped the formula on its head. Rather than funding 90 per cent of the proposed waterworks, Ford et al, are putting up less than 10 per cent. It is County ratepayers on the hook for more than 90 per cent.
On paper, the County plans to spend $212 million on Wellington waterworks and a regional water plant, intake pipe and a 20-km pipeline to Picton. That means Doug Ford’s funding grant covers about 8.6 per cent of this bill. Fully 91.4 per cent of the costs, however, will fall on existing ratepayers (until development charges are collected).
Doug Ford is a genius. He really has the knack of downloading provincial costs onto property taxpayers. And getting local politicians to thank him for it.
But what if (when) costs come in higher than expected— let’s say 25 percent more (after all, the water tower, the only bit actually completed, was delivered at about 40 percent over budget)? In this highly plausible scenario, the provincial contribution shrinks to below 7 per cent of the cost of about $265 million.
The HST payable if all goes well—will top more than $34 million. Together, this adds up to a tidy $299 million. By then, the province’s share of this unprecedented capital spending will dwindle down to a paltry 6 per cent of the cost.
Thank you, Doug Ford, I guess.
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