City’s debt to surpass $400M by end of year

Provincial budget, lower sales tax bring 4.96% hike in property levy

The City of Saskatoon’s debt is expected to climb to $411 million by the end of this year. It surpassed the $300 million mark for the first time in 2016.

The city is projected to pay $32 million in 2018 just to service that debt.

The Canadian Taxpayers Federation’s prairie director, Todd MacKay, said he sympathizes with the predicament created by the March 22 provincial budget for municipalities like Saskatoon, but he thinks it’s time to stop blaming the province.

“I would say this is the last time they can use this excuse,” MacKay said in an interview on Tuesday.

The preliminary budget the City of Saskatoon released on Monday includes a 4.96 per cent property tax increase. Civic administrators and politicians made clear that most of that increase can be linked to a decrease in provincial revenue.

The city was left with a $10.9-million shortfall just to maintain the same level of services next year as this year. The provincial budget was blamed for $6.1 million of that total. The province’s controversial decision to slash some grants-in-lieu of taxes by Crown corporations accounts for $3.1 million, while the other $3 million is due to lower provincial sales tax revenue, which funds municipal revenue sharing.

Darla Lindjberg, president and CEO of the Greater Saskatoon Chamber of Commerce, called the property tax increase “substantial,” but gave city staff credit for reducing it from the May estimate of 6.97 per cent.

Both Lindjberg and MacKay said they expect city council to work hard to further reduce the property tax increase.

MacKay said he understands the pressures facing cities like Saskatoon and applauds the city’s preliminary budget for holding spending to the lowest increase in more than a decade.

“Obviously, it’s a tough situation, tough choices made throughout the province,” he said. “But we also have to make sure we’re not avoiding tough choices at city council and forcing people to make tough choices at the kitchen table.”

MacKay noted the preliminary budget includes nearly 30 new employees.

Lindjberg said the chamber has long encouraged the city to find ways to increase productivity.

“I think they’re working hard to find efficiencies,” she said. “I think you can always work harder to find efficiencies.”

MacKay also raised concern about the city’s debt.

He said P3 projects provide cost certainty for governments, but also require huge outlays of money. Building and maintaining Saskatoon’s civic operations centre will cost $190 million and the project to build and maintain two new bridges is pegged at $497.7 million.

“That debt is getting very high,” MacKay said. “That’s potentially a risk when we see interest rates clicking upwards.”

The city needs a clear plan to retire debt, he added.

Saskatoon still sits below its $558-million debt ceiling, which is set by the province. The city’s plan to retire the debt stretches to 2043. The debt has more than doubled since 2012, when it was $197 million.