City council will face a tighter budget in 2018
It was only five months ago that Peterborough city council adopted its 2017 budget. Nonetheless, work by city staff on next year’s budget is already well underway; city councillors will have their first look at the staff recommendations for the 2018 budget guidelines in mid June.
Like rust, good bean counters never sleep. Last month, the city’s financial services staff – a group that I believe consistently sets the highest standard for performance among departments at City Hall – distributed their 2018 budget preparation guidelines to senior staff. An internal document, the guidelines look at the need to respond to the city’s current and upcoming financial challenges and set out the big picture directions for the budget requests of all departments. These guidelines are undeniably austere, foretelling a genuine tightening of the purse strings. Here are some of the key staff directions for next year’s operating budget.
In terms of services, they are to be maintained but not expanded. Only council-approved or previously approved service improvements will be considered. No other service enhancements of any kind are to be included in the first draft of the 2018 budget. Overall costs are to be curtailed. Inflationary adjustments are acceptable, but departments are urged to find offsets by reducing their costs elsewhere. Staff are directed not to assume the same level of expenditure as in previous years.
Work programs are to include only essential projects and only those expected to be completed with available resources. No new staff should be included in the budget unless city council or the CAO have approved the position, or where reduced department expenditures or new revenues will offset new employee costs.
The same overall tightening is being applied to the city’s capital budget as well. That budget poses a unique challenge in 2018, namely the city’s ability to carry the debt it uses for expenditures on its capital projects. This year, there were 194 of those projects listed, having an estimated cost of $79.3 million. They include a new twin-pad arena, the Louis Street urban park, a new public works yard and new transit equipment and facilities. The city has a policy that puts a limit on the amount of debt it will carry for these projects. In 2018, it will have reached that limit. This means that council will need to cut back on the pace of its capital program in order to live within its policy.
The staff directions make plain the need to limit capital expenditures. Funds available for capital projects are to be reduced and staff are directed to include no more than 50 per cent of the tax-supported debt financing that they requested in 2017. Although there may be additional funds from the sale of Peterborough Distribution Inc. and from casino revenues, they are not anticipated to match the funding that has been available in the past few years through debenture financing.
This tightening of the purse strings, if approved by city council, will mean that some important projects will likely be delayed. Finding the balance between what goes forward and what doesn’t will be one of the most significant challenges our city councillors will face this term.
In recent budget debates, some councillors have expressed unease about the city’s multi-year practice of approving annual property tax increases of approximately three per cent – a pattern which, if sustained – is likely to cause increasing hardship to low and moderate income tax payers. City staff have given those councillors a rational basis on which to make their case. It remains to be seen if they will act on it.