Thursday, November 29, 2012

Will City Taxes Go Up 20% This Time?

Or Will City Manager Continue This Approach
To Water, Sewer & Roads Funding?

We are rapidly approaching that time of year when city hall management lays out the budget for the next five years. The five year financial plan presented last year I believe was calling for an increase on city taxes in the order of 3%. Of course that number is not realistic given the state of underfunding the city's infrastructure.

17% Increase Needed For Water, Sewer & Roads Alone!

You may recall that in Nov. 2010 Mr. Hickey presented council with an asset management report that would indicate a current underfunding of water, sewer and roads in the order of $12,000,000.00 annually! That is an amount, if accurate, that would require a tax increase of 17% from this point forward just to insure our most basic infrastructure is funded.

For reasons only understood by higher-priced minds than mine Mr. Kenning has recommended that council ignore this shortfall until after 2013 when the industrial tax shift is complete. I have always understood the 'political' reason for this decision, but never the prudent fiscal reason. As I recall Councillor Kipp was the sole councillor who opposed adopting last years budget for this very reason. The balance of council, as can be expected, followed Mr. Kenning's advice.

The result of this decision is a potential ticking time bomb just waiting to blow up in the form of rupturing water mains or sewer lines. Holyrood Drive is a recent example of staff's inability to guess when something will need replacing.

The number of 17% is based on the accuracy of Mr. Hickey's asset management report, which I understand is being re-worked. However, if it proves to be accurate it should require adding in the increases for the past two years this shortfall has been ignored by Mr. Kenning just to play catch-up. In other words if we should have raised taxed by 17% the past two years, which were ignored we would need to raise taxes this year by a factor of three to get caught up. That would be a whopping 51% tax increase.

The reason given for ignoring this water, sewer & roads shortfall was claimed to be due to the industrial tax shift, which reduced industrial taxes and shifted them over to homeowners these past few years. A politically prudent decision but certainly not fiscally sound. The large number of staff who can take full pensions come 2013 may or may not have a bearing on the policy to ignore this issue and simply let someone else deal with it. Kicking the can down the road is more and more becoming a method our leaders are adopting lately.

Next years budget is scheduled to be presented to city council at the Dec. 10 COW meeting, whether that will be in the new annex is an unknown at the present time.


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