Note: This article was originally published in The Overcast.
The City of St. John’s City Council just released a pretty intense budget. I’m one of the guys on that Council, so I want to explain what happened.
There are a number of things in our recent budget that aren’t going down very well with pretty much anybody: an increased property tax rate; increased business taxes; the elimination of a subsidy for water lateral repair; and a fifty percent cut to our arts grants funding.
Those are all pretty bad, and that’s not even the full list.
Why did we have to do this? Weren’t things going great?
At this point I’d like to interrupt myself and declare that I voted against this set of painful cuts and increases. But I’d be lying if I didn’t admit that part of the reason we’re in this situation is due to several decisions I approved of.
One major hit is an increase in salaries. That might sound bad, but the rationale is that this was the price paid to have our unions agree to a long-term solution to a looming pension deficit crisis that other municipalities are already suffering from. This has been viewed as a victory by several groups who advocate responsible government financial management.
As well, in another effort to cut long-term costs we offered early retirement packages to several high-level staff. While the positions will be re-filled, it will lead to fewer staff as empty positions are not filled at the end of the shuffle. This had an up-front cost but will reduce future yearly salary expenses.
Another biggie is a major investment in what’s called “capital works.” These are infrastructure costs we have to incur over the next decade, like: Federally mandated water treatment enhancements (to the tune of $200m); demographically demanded water supply additions (that’s $140m); and required replacement of aging, costly-to-maintain water and sewer lines like the ones under Water Street (estimated city-wide total: $200m+).
That’s just the water and sewer side of things. We also have lots of other projects in our 10-Year Capital Plan like bridges, buildings, parks, roads, and traffic infrastructure. This will all total $1.25 billion (!), and while we will be cost-sharing most of it with the Province and Feds, a lot of it leads to increased yearly operating and maintenance expenses.
This is all a really big deal. While a lot of our decisions have been made with the intent of “Investing in Tomorrow” (that’s the title of our budget), we are legally required to balance the budget each year.
That means we have to raise revenue (mostly through property taxes) to cover costs in the same year they’re incurred. Tax increases can be painful. So to minimize the tax increases this year, staff looked at where we can cut costs. Unfortunately, many of the cuts they were able to find really suck.
We’re in a serious pickle, folks. Expenses have skyrocketed at City Hall, and while it was all with the intent to improve the City for residents, many of us are hurting.
There has to be a better way to respond to our financial situation. Perhaps we need to go back to the drawing board, and there’s no shame in us on Council admitting that.
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