Region’s 2020 budget battle will be difficult
Staff send councillors a sobering fiscal message
Niagara Region politicians have headed into the summer with good news and some bad news when it comes to the budget — and the expectation there will be some hard choices and heavy lifting in the fall.
Staff had initially estimated dealing with provincial cutbacks and downloads in 2019 would force the municipality to come up with an extra $4.03 million or cut services.
Then Queen’s Park had a change of heart and deferred most of the cuts and downloads for a year. The deferral left the Region with a manageable gap of about $600,000, which staff was able to fill by dipping into some reserves, cutting some discretionary consulting and leaving some staff vacancies open temporarily.
But in 2020, the impact of the Tory cutbacks will kick in, in addition to $16.5 million in new programming and initiatives. It includes $6.2 million in new spending for regional transit, $3.6 million in long-term home care redevelopment and $2.2 million for airports.
“There are going to be difficult decisions that come at the end of the year,” said Todd Harrison, the Region’s treasurer and commissioner of enterprise and resource management services.
Fort Erie Mayor Wayne Redekop said at some point council will have to talk about more than just the sustainability of regional operations.
“We have to talk about the sustainability of the taxpayers and their ability to fund what is it we are trying to do,” Redekop said during the budget review committee-of-the-whole meeting at the end of June. “We need to focus on priorities.”
Helen Chamberlain, deputy treasurer and director of financial management and planning, gave councillors a rundown of budgetary pressures for next year’s budget, which staff hope
council can complete by the end of the year. The pressures include: Development charges exemptions that created a $5-million hole in the budget in 2019 and are expected to do the same in 2020;
Operation pressures in the areas of emergency medical services, transportation and seniors care;
Waste management costs can no longer be offset by the sale of recycled commodities because of a collapsing market;
An asset management program identified a $546 million backlog of infrastructure projects that aren’t on the books yet. Chamberlain said it would take a two per cent increase in the levy over the next 10 years to close the gap.
In 2019, the Region is slated to collect $366 million through its taxation levy on a capital and operating budget of $1.25 billion. The rest of the funding comes from federal and provincial grants; fees, charges and sales; other revenue (investment income, rent, etc.); reserves; and debentures.
The fiscal pressure hasn’t gone without notice.
Chamberlain said Moody’s, a bond rating agency, issued a recent report that warned Ontario municipalities should brace for a $2-billion shock in coming years as provincial cuts take hold. Regions with diminished reserve funds will likely be the hardest hit, Moody’s said. Credit rating downgrades are possible.
“In our view, municipalities will need to address these shortfalls through a combination of administrative efficiencies, raising taxes, cutting some nonessential services and drawing on reserves,” Moody’s vice-president Adam Hardi was quoted as saying.
Region staff hopes council can have the 2020 budget completed by the end of the year. The first big date will be Oct. 10 when council considers the capital budget.