Tuesday, Council got a combined debt-and-budget presentation that set the stage for the upcoming, fuller 2014 budget deliberations starting next week. CAO John Brown gave us a recap of a report (produced by BMA Management Consulting) about the town’s debt situation and financial wellbeing. It was a mix of good news/bad news.
The good is that it’s not as bad as it seems, certainly not as bad as some other municipalities, but mostly in the middle of the peer group selected for the report. The bad is that it’s not as good as we’d like it to be. But barring a big tax increase to reduce the debt and funnel more into reserves, I don’t see how it could be a lot better.
His report also included a comparison of Collingwood’s financial situation to six other municipalities:
I have to wonder why several of these were chosen as comparators by the consultants. The majority are not at all like Collingwood:
- Wilmot Township, according to its own website, is “…approximately 20,000 persons living in small towns, settlements, and on farms.”
- Springwater Township “…consists of both urban and rural communities, with a population of over 18,000 people. There are nine settlement areas, with Midhurst and Elmvale being the largest with a population of 3100 and 1700 respectfully. Other settlement areas include Snow Valley, Centre Vespra, Minesing, Anten Mills, Phelpston, Orr Lake and Hillsdale.”
- Prince Edward County is similarly not one urban centre, but a collection of small, rural communities, the largest of which is under 5,500 population.
- Innisfil is similar: small communities, some bedroom residential development close to Barrie, but mostly rural. Cookstown, one of the largest centres, has a population of about 2,000.
Only Orillia and Owen Sound are similar, small urban centres. Why would we not compare ourselves to Midland or Wasaga Beach? Brockville? Uxbridge? Huntsville? Orangeville? Surely these small urban centres would provide more of the apples-to-apples comparisons.
I’d also like to have seen such data as how many employees are on the municipal payrolls in each; if they have their own or use OPP police service (and how much their police and fire budgets were – our services for 2014 will consume 22%, or $6.1 million, for policing, and 16%, or $4.4 million, for fire: more than a third of our budget in the combined costs).
I’d like to know their total budget, including operations, capital, how many buses they run, and so on. What are they spending their money on and why? What reserves do they have, what assets? Municipal finance isn’t so simple it can be reduced to a few lines.
Rural communities have very different needs, infrastructure demands, growth issues, etc. that make it difficult to adequately compare them to Collingwood.
We are also a combined retirement and tourist destination centre, which creates different sorts of challenges for services and infrastructure. Our percentage of people 65 and older is about 23% – much higher than the provincial average of 14.6%, and our percentage of people under the age of 55 is lower than the provincial average. That has implications for housing, employers, services, and commercial and industrial growth.
On page 8 of the report, it notes that the average percentage of farmland by assessment value in our comparators was 5.2%, while the amount is only 0.1% in Collingwood. But if you look at the maps, the actual, physical amount of farmland in those four “peers” significantly dwarfs the whole area of the Town of Collingwood. Farmland is the lowest on the assessment ladder, so having less is good for potential tax revenue.
We also have a higher percentage of commercial and industrial assessment, which is equally good for tax revenue.
What we never learned from the report was how much money had any of them invested in major infrastructure projects or municipal facilities over the past decade or more. Collingwood has had an ongoing infrastructure upgrade and replacement program, as reflected by the projects paid for by debentures. Plus we have a fairly modern museum, a new municipal building (library and planning services), a new fire station, upgraded police station, new parks, new recreational facilities, new trails, new works building, an airport, a harbour and a comprehensive municipal transit system. Not many municipalities can boast all of that.
Our CAO explained that debt wasn’t all bad – debt means you are building, upgrading and maintaining infrastructure, erecting new facilities. We maintain our infrastructure constantly else face higher costs when it fails. Debt isn’t operational: it’s used for capital projects.
But, the CAO cautioned, it’s important to manage that debt wisely. Which this council has been doing. And, he said, we can’t continue the status quo; we don’t want to push our debt capacity to its limit.
First, of course, we have to manage our spending. The initial overview of the budget has a projected 2.1% increase (about $67 per average household). However, in light of the CAO’s sobering presentation, I would not be surprised if department heads were told to come back with lower budgets, even in the negative area. I will certainly argue for a lower amount in many areas.
Personally, I’d rather see an overall increase in taxes no more than 1.2%, but even better would be a small reduction, say -1% or even -2%.
Of course, it may mean a reduction of non-essential service in some areas. You cannot continue to provide certain levels of service without paying for them – and costs always increase. Utility costs, inflation, fuel costs, food, wages, benefit costs, materials – they all go up. So to maintain even a zero-increase-based budget, you need to cut something or someone. Essential services won’t be affected.
Therein lies the rub. Quality of life is measured by some of those services. Taxpayers pay for a good life – and we do have a good life here in Collingwood. So what, if anything, are they willing to forego in order to avoid any increase? Or would they rather pay a little more to retain these services?
What can council or staff find in the budget that is non-essential and can be removed or reduced without affecting that perceived quality of life? We need to find more opportunities for shared and contracted services.