A proposal brought forward by city councillor George Maroosis brought the proposed tax levy increase down to 2.21 per cent on Wednesday night in the last special budget meeting before the General Government Committee votes on it next Monday. PHOTO BY LIAM BERTI
Just like trying to sprint through a swimming pool, City Council has been working frantically to cut budget costs in recent weeks with little to show for their efforts.
But in the last installment of their special budget meetings at City Hall on Wednesday night, they brought the proposed tax levy increase down to 2.21 per cent from the 2.88 per cent established last month.
Of the ideas brought forward, Coun. George Maroosis’ proposal to borrow another $500,000 of debt for capital spending was the only one to have an impact on the tentative budget.
While it may seem counterintuitive to be taking on debt, Maroosis argued that the current low interest rates present a big opportunity for the city.
“Money has never been cheaper to borrow," he said. "This may be the time to borrow for capital in anticipation that it’s not going to cost that much to carry."
Mayor Al McDonald suggested it might be time for council to revisit their capital budget policies given the current interest rates and the ability to amortize a 10-year loan at a mere two per cent, for example.
Five years ago, the city was committed to adding $500,000 a year to their capital spending debt up to a maximum of $13 million. But the previous council thought that was too much and capped the borrowing off at $9 million.
The majority of council already voted in favour of cutting the pay-as-you-go capital spending by $1.2 million and reducing the debt by $1 million in the first cost-cutting session last month.
But by adding the extra $500,000 that Maroosis put forward on Wednesday, the city will still be under that cap at $8.5 million borrowed.
McDonald made it perfectly clear that the Maroosis move won’t reduce overall capital spending, it will merely be borrowing that money instead.
While most councillors seemed apprehensive to vote in favour of adding to the city’s debt, Coun. Daryl Vaillancourt was perhaps the most vocal in his disapproval.
“I understand cheap money and I understand cheap amortization; but to add to the debt side when we have tried to move to a higher pay-as-you-go and use the cash that we have is extremely counterintuitive,” he said.
There was also some concern for the increased borrowing throwing the debt-to-capital spending ratio out of whack in the eye of credit rating agencies.
But ultimately, the group decided it wouldn’t be too much of a hit and that the significance to the overall tax levy is too good to pass up.
In light of the harsh winter conditions, council also discussed raising the winter maintenance budget to $3 million from the current $2.88 million.
But that motion gained no traction after both the city’s chief administrative officer, Jerry Knox, and director of engineering, David Euler, said the current budget is a good target for them to work towards.
“We recommend leaving it there; yeah there might be challenges, but it’s a target for us,” said Knox. “Our pubic works have done a really good job in making some adjustments because we were in the situation of having to. That’s a positive that they have risen to that challenge.”
While Mayor McDonald's special meetings broke the mould in terms of a typical budget process, council members expressed their approval for the format because of the open dialogue and discussion it required, even though it has been one of the most intensive deliberation developments in recent history.
“I actually prefer this process; I feel that I’ve had more input and we’ve had more dialogue,” said Coun. Mac Bain. “We probably know more about the budget this year than the 11 years of council that I’ve sat on. I like this process; it’s not the way we’ve done it before, but this is a consensus budget.”
The tentative budget will now go before the General Government Committee next Monday before council casts their final vote the following Monday, March 16.
