City keen to spend provincial infrastructure funds on roads

Saskatoon city hall wants to use the vast majority of the $35.5 million in new provincial infrastructure funding it expects to receive to cover the cost of preserving roads.

That would free up $15 million from the existing roadway preservation reserve to offset the city’s potential deficit or reduction in reserves, plus another $12.1 million for council to spend on various other projects.

In addition to the proposed $27.1 million injection into roadwork, city administrators are also proposing that $2 million from the province be used to fund a permanent downtown festival site.

The remaining funds would be spent on neighbourhood traffic reviews, sidewalk rehabilitation and roadside safety improvements, according to a report headed to council’s governance and priorities committee on Monday.

The money is expected to flow from the $150-million Municipal Economic Enhancement Program (MEEP), a per-capita allocation announced last month as part of a larger $2-billion infrastructure “booster shot.”

Saskatoon city council subsequently approved a plan to use $15 million of the $35.5 million it expects to receive to cover the cost of already-funded capital projects, freeing up cash to help offset an annual deficit.

That does not sit well with the Saskatoon Construction Association and the Saskatchewan Provincial Heavy Construction Association, which are urging council to spend the funds on projects rather than pay down municipal debt.

“Investments in infrastructure are a sign of council’s commitment to the Saskatoon and Saskatchewan economy, the rebuilding of which begins at home and can only happen when those investments flow to private-sector contractors,” the heads of both associations said in a joint letter to council.

The city’s worst-case deficit has most recently been estimated at $32.9 million, following council’s approval of a suite of measures, including a hiring freeze, aimed at reducing the financial toll of the pandemic.

Municipalities are not allowed to run deficit budgets; any shortfall must be made up the following year by cutting planned spending in other areas or raising property taxes — or emergency relief funding.

The Federation of Canadian Municipalities has asked Ottawa for $10 billion, but the federal government has so far committed $2.2 billion to municipal financial recovery projects.

“Had we not received the MEEP funding, we would have reduced our capital (spending) program in 2021 to make up the deficit,” Saskatoon’s chief financial officer Kerry Tarasoff said last month.

City council is expected to receive an updated financial forecast later this month, though Tarasoff has signalled the city is in better financial shape than originally expected.

The remaining $12.1 million — which will be replaced with government dollars in the roadway preservation reserve fund — can be spent on a wide range of projects, from a new firehall to a public wireless internet pilot.

Council’s governance and priorities is set to consider the report and rank order the long list of potential projects that could be funded using the remaining cash at its meeting on Monday.

The committee could also choose to give funds to projects suggested by the Remai Modern art gallery, TCU Place, Sasktel Centre and the Saskatoon Police Service, the report states.

City officials have said they believe the proposed use of MEEP funding is within the rules of the program, funds from which must be used between May 6, 2020 and March 31, 2022.