No quick fixes

County on the long journey toward financial sustainability

Council is having its first look at the municipality’s proposed 2014 budget this week. The picture it paints is a grim reminder of the challenges of balancing the County’s books. The municipality has too many roads, too many buildings and too many decaying underground pipes. Each category requires upkeep, repairs and, in some cases, replacement. But to properly fund this list, the municipality would have to float a tax hike that would cripple the finances of many County families.

Thus the budget presented this week features a modest (2.2 per cent) increase in property tax rates, and an equally modest plan to fix roads and buildings—fixing only those things it cannot avoid.

Instead, the municipality will once again focus, in 2014, on building up its reserves— shoring up the County’s finances against a backdrop of growing needs and declining support from senior levels of government.

It’s a budget that will likely arouse little heat—neither for or against. Rather, it is a studious and patient continuation of the longterm work needed to repair the County’s damaged finances after years of neglect.

The budget also offers a clear signal that unless the County is able to kick start new residential homebuilding, and welcome new families, more and more of the burden of the cost of running the municipality and replacing its decaying infrastructure will fall increasingly upon fewer and fewer homeowners.

The good news is that operating expenditures— the amount of money needed to run the County and its services—have been contained at increase of just 1.6 per cent. The bad news is that provincial funding support has shrunk, policing costs have jumped and a decline in new homebuilding has delivered disappointingly small growth in the assessment base— in fact it is the lowest increase in new tax assessment in 2013 than generated in many years.

The upshot is that council is looking at an increase to the net tax levy, that is the amount funded by property ratepayers, of 2.2 per cent.

Meanwhile, many hoped-for improvements to roads and services have been put on hold. Further, County finance staff are signalling a difficult budget in 2015—warning that it may have to dip into the municipality’s newly formed Tax Rate Stabilization Reserve in order to prevent a crippling tax shock next year.

The County intends to spend just under $10 million in capital expenditures in 2014—about 40 per cent of this on buildings and infrastructure. The biggest piece of this pie is earmarked for the County’s new firehall plan.

Meanwhile, the big pressures on the County’s operating budget include another decline in the amount the municipality receives from the Ontario Municipal Partnership Fund (OMPF). This is a mechanism the province uses to correct the imbalances it created when it downloaded roads and other services upon small rural municipalities with too few residents to pay for their upkeep.

In 2012 the County received nearly 3.2 million in OMPF balancing funds. It will receive less than $2.8 million in 2014, a 14 per cent decline in just two years. Meanwhile, the cost of policing services continues to rise unabated. From $5 million budgeted last year, County policing services are expected to rise to $5.4 million in 2014.

Combined with the expectation of lower offsetting revenue, the net effect of the increase in policing costs translates into a 13 per cent hit to the County’s tax levy.

Offsetting these pressures is $500,000 in expected surplus from 2013 and about $300,000 in new assessment. Another $246,280 of relief has come in the form of reduced municipal funding of social and family services.

Mayor Peter Mertens describes the 2014 as a status quo budget, one in which “staff were instructed to bring forward the same budget as last year.”

“On Monday we approved the capital budget of $9.6 million as well as an increase of $1 million to the roads reserve. Our objective is to continue to build our reserves to meet the pressing needs of our deteriorating infrastructure. We cannot continue to put off dealing with our infrastructure deficit.”