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The preliminary water and wastewater rates for the City of North Bay's 2023 budget have been approved at the committee level and will be voted on by members of city council during its next regular meeting on Jan. 17 to make them official.
A residential customer that consumes an average of 14 cubic metres of water would see a yearly increase to their water bill of $34.32 over 2022 or $2.86 per month this year, effective retroactively to Jan. 1.
The initial water and wastewater budget presented by staff had already built in the use of $205,000 in capital reserves but through two evenings of deliberations over the past week, council members and staff discussed various options to further reduce the impact of the levy increase from a starting point of a 5.53 per cent increase over 2022 to the 2.97 per cent level they arrived at with the application of an additional $619,600 from reserves in this year's budget.
See: the revised staff report, the final calculated rates, and final sample invoice.
During those discussions, Mayor Peter Chirico made it clear he is in favour of the judicious use of reserves when warranted, likening them to a "rainy day fund," and adding that due to the economic hardship citizens are facing, "it's pouring right now."
If passed, the reserves used in the 2023 water and wastewater budget will total $824,600. The initial projections at a 5.53 per cent increase would have seen yearly bills increase by approximately $62 (or $5.23 per month) for the average residential customer. The use of additional reserves will drop that annual increase by $28, according to Chief Financial Officer Margaret Karpenko, who spoke during Tuesday evening's special committee meeting.
"Staff will also undertake a review of the 50 per cent fixed and 50 per cent variable," water billing methodology, Karpenko said. "The results will be brought forward to council for consideration in mid-2023."
The residential fixed meter rates will be $25.80 this year, up $0.07 over 2022. At the other end of the spectrum, The large six-inch fixed rate will increase by $3.46 per month. The variable rate will increase to $1.44/cubic metre from $1.42. The sanitary surcharge will increase to 96.23 per cent from 91.47 per cent.
For a sample monthly bill using 2022 figures, click here.
See: the City of North Bay's dedicated 2023 Budget page
Coun. Tanya Vrebosch, who has previously served as the budget chief has been pushing for a hardship program to soften the blow of the increase for seniors and other lower-income families and individuals in the past week's deliberations while also cautioning her colleagues about the future financial impacts of artificially paying down the levy by using reserves.
When the different scenarios and potential levels of reserve usage were presented to council Monday evening, each was accompanied by a forecasted effect on levy increases over the next four years. Tuesday, keeping in mind a department-wide operational review is imminent that could affect budgetary forecasting Vrebosch asked Karpenko about the proposed use of the $824,600 and what it means financially for the municipality in the near future.
Karpenko did not have an updated forecast prepared for the $824,600 reserve impact but offered instead a "scenario presented using $500,000 in 2023, in order to minimize a significant [levy] increase in the following year, we use the term of 'weening ourselves off of that revenue,' over a four-year period to try and [avoid] any major fluctuations, we would use $1.4 million in reserves. That's a forecast. At the end of the day, the real reserve transfer requirement is always dependent on all of the influencers in that budget year, and what is required to stabilize and slowly reduce that reserve income.
Coun. Sara Inch asked whether using reserves to pay down the capital costs of water and wastewater was a typical practice.
Karpenko responded, "The theory and approach for the water and wastewater budget was to use the reserves to offset the current long-term capital funding policy impact — that was just around $750,000 — in order to minimize the impact on the rates. This is called tax rate stabilization...in this instance, using the capital reserves to offset the capital levy with a commitment to review the long-term capital funding policy, I don't object to the use of the reserves. I would raise caution.
"Will a new funding plan reduce the future impact? We don't know that but we need the time to run the numbers. In terms of a stop-gap, I think it's probably a fair approach but I do caution that it could result in the use of reserves for a period of time but our reserves don't always get replenished. We have to proceed with caution and see how the economy moves forward."
Inch clarified that it would take the use of nearly $825,000 in capital reserves to lower water bills by about $34 per year, not per month.
"Per average residential user," Karpenko confirmed.
Inch further inquired about the loss of interest from those reserves.
"It's a council decision. Do you forego that interest revenue to help the community this year," Karpenko stated. "Do you forego that interest revenue in order to do your policy update and your policy review? I think that's the decision of council on the pros and cons of that."
Councillors Vrebosch and King voted against the water and wastewater rates. Councillors Lana Mitchell and Mac Bain were absent.
