City Council are committing to a bold budget plan for the new year.
In their first meeting of 2016 on Monday night, the politicians approved a tax levy increase of just 1.51 per cent with a 9-2 vote, a $1.2 million increase over last year.
The lowest increase in recent memory was sold on the premise of temporarily taking the pressure off the tax levy, maintaining existing service levels, increasing investment into the capital budget, reducing the city’s debt, investing in growth, and avoiding relying on reserve spending.
However, almost all of the supporters were quick to call attention to the risks involved.
Of the approximately $118 million budget, $80.5 million will be levied on the taxpayer.
Personnel costs will continue to be the city’s largest expenditure, which represent 33 per cent of the overall budget ($39 million), followed closely by the various agencies, board and commissions (ABCs), which require 31 per cent of the funding ($37 million).
As explained last month by Margaret Karpenko, the city’s chief financial officer, 46-cents of each dollar that the general taxpayer spends towards the levy would go to the ABCs, 16-cents to fire services, 13-cents to community services, 12-cents to engineering and works, seven-cents to general government, and six-cents to corporate services.
Of the ABCs, the police services and the District of Nipissing Social Services Administration Board (DNSSAB) make up 21 per cent and 14 per cent of the $37 million cumulative ABC portion of the levy, with budgets of $11.5 million and $17.3 million, respectively.
Collectively, all of the ABCs came in at less than a two per cent increase, something Coun. Derek Shogren said should be acknowledged.
“They came to the plate this year and they deserve to be recognized for it,” said Shogren. “The fire department came in with the lowest increase they’ve asked for in 15-plus years, and the police department the same with just under two per cent. I think all the ABCs have certainly recognized that they need to partner with the city to deliver a low tax increase.”
Council’s pay raise, meanwhile, is earmarked to cost the city an extra $51,000 in 2016, while the hiring of a new communication and strategic development officer will cost $113,300.
To help reach those goals and balance the budget though, the city will use Mayor Al McDonald’s comprehensive plan, which is characterized by calling in their outstanding $25.6 million loan to North Bay Hydro ($19.5 million of which is being called this year), reducing debt issuance by $3.5 million per year, eliminating the use of a $400,000 stabilization fund, and continuing to set an annual $250,000 savings target for the chief administrative officer.
The Hydro money will then be split up in $4 million capital budget injections over the next three years, plus another $6 million in the operating budget over a six-year period. McDonald said that money could also be used to help reduce the city’s outstanding debt by close to $10 million by 2024.
Concern over recalling the Hydro loan
Without that approach, the levy increase could be as high as 4.55 per cent, causing many of those who supported the plan to preface their vote with a hint of caution.
“Citizens have to be very aware of what could happen,” said Vrebosch. “If the Mayor’s plan does work, then that’s great. But if it doesn’t, then we’re looking either at severe cuts or a spike in our tax rates.
“I will support it, but I am actually very fearful for what we’re doing for future years ahead of us,” she added.
Coun. Chris Mayne also expressed concern for forgoing the annual debt payments from Hydro in favour of one-time payment relief.
“As nice as that 1.5 per cent levy increase is, it’s not real,” said Mayne. “We are cashing in a $20 million asset.
“If you live in North Bay and pay taxes, 1.5 per cent [increase] is great, you’re saving money,” he added. “But if you use hydro, you’re going to pay that same amount back over the next 20 years, plus $8 million in additional costs.”
But despite the concern, the only two dissenting votes came from councillors Mike Anthony and Mark King. Anthony continued to argue that any tax increase just widens the gap between a higher tax rate and lower income levels in town.
“I think we’ve become more concerned with the infrastructure gap than […] what I refer to as the affordability gap, and in reality what a big, big growing chunk of the community can afford,” said Anthony.
“I think really what we’re doing […] is we’re buying down the tax rate by 3 per cent,” echoed King. “I’m deeply concerned about the method used to get to that point.
“We’re in dire need of actual growth in order to fuel the desire to operate the city at a certain point, and until we really get to that point what we’re doing is providing a charade to the tax payer because in actual fact we have a much larger increase going on,” he added. “The direction that we’re heading in only further creates more of a problem in years to come.”
Don Rennick of the North Bay Taxpayers’ Association attempted one last time to discourage councillors from approving the Mayor’s plan in a public presentation prior to the vote. In what he called the worst plan he had ever seen, Rennick said the Hydro borrowing is fictitious money and is a short-term benefit to council that will cause long-term pain to taxpayers.
Instead, he continued to point towards city staffing and payroll for potential savings.
Overall, the multi-year approach was presented by the Mayor and senior staff in September and the intensive deliberation process saw the politicians meet 23 times to find consensus. But now the real work begins, the Mayor said.
“A budget is just a framework for what the city is all about,” said McDonald. “We can continue to look at expenses, but we better turn our eye towards growing our city.
“I don’t think there’s a pot of gold at the end of any rainbow out there, but I can tell you, through growth we can solve a lot of our problems,” he added. “If we don’t focus on growth, then shame on us.”
Capital
As part of Monday night’s approval, the city has been given the green light to transfer $7.4 million from the Operating Fund to the Capital Fund to finance approved capital projects that would otherwise require pay-as-you-go funding.
Those funds are part of an overall capital spending plan that calls for up to $39.3 million to be spent next year. Just under $26 million will be for general capital projects, while the additional $13.3 million will go towards water and sewer projects.
Among the approximately 100 targeted projects are the $4.2 million Laurentian Ski Hill sanitary sewer trunk extension, the reconstruction of the Lakeshore Drive overpass, and the Seymour Street - Highway 11/17 intersection.
