Council in budget dilemma
Mike W. Bryant
In fact, nearly $10 million in federal and territorial government grants promised for building projects and infrastructure may prove troublesome because there is not enough property tax revenue coming in to keep new facilities staffed and running, said Dave Devana, director of corporate services.
He said the shortfall may affect big ticket items like building a sports fieldhouse or a new library.
"Paying for it is not the problem, but operating it for the longterm is where you need money in the general fund to do that," said Devana. "Our dilemma is finding enough money to operate the facilities once they're built."
Government transfers and funds, including $1.3 million for a federal gas tax rebate, $7.25 million in Northern Strategy money and a $1.41 million territorial government infrastructure grant are supposed to be spent on capital projects.
City operations and salaries come out of the general fund which is budgeted at $22.4 million next year.
City Hall's 2006 budget draft released in November recommended a 1.9 per cent property tax increase with a similar one for 2007, but new estimates given to council this week showed a wider gap between costs and the money needed to cover it.
Revised numbers show a need for a 3.25 per cent tax increase. Less cash than expected from the territorial government for insurance premiums, and salary revisions for city and Multiplex staff, contributed to a $520,000 shortfall - up from $304,000 in November, Devana said.
During budget deliberations council considered moving $125,000 out of the capital fund to bring next year's tax increase down to 2.47 per cent, which would cover a shortfall of $395,000 out of the general fund.
Devana said part of the problem is that if money is taken out of the capital fund this year to pay against a tax increase, there will still be a need to cover the gap in the following years.
"That $395,000 will show up again next year as an operating expense," said Devana.
"Then are you going to cut capital again next year, and the year after? Instead of getting the money, you're going to have to re-examine every year how you're going to pay for this shortfall in (operations and maintenance), and the only place to get the money is to cut back on your capital."
Meanwhile, salary, fuel and inflation costs continue to rise, said Devana.
Coun. Dave McCann said doesn't quite buy the notion that there's a need for a bigger tax increase.
"That's the spin that's brought to us," said McCann. "But the reality is there is a lot of money coming to us."
Removing money from the capital fund to lower taxes goes against city budget policy, but McCann said some rules ought to be bent if it lessens the burden on taxpayers.
"I'm very against the notion of being forced by our policy to do all sorts of draconian things," said McCann.
Council will vote on the budget Monday evening.