Sensible approach to 2018 budget plan

For five years now Peterborough’s annual budget has leaned heavily toward upgrading the city’s infrastructure – streets, sewers and other “hard services.”

Based on a staff report presented to city council’s budget committee Monday night, 2018 and the years beyond will be no different.

The budget plan shows a 2.85-per-cent tax hike next year on spending of just under $260 million. If you own a home assessed at the city average of $240,000 you’d pay an extra $109 in property taxes.

The plan is not final. People can tell council what they think during a meeting at the end of this month and again during full budget talks in November.

But it will likely be close to the final document.

The draft budget allocates a 1.7-per-cent share of the tax increase to new operating costs. Along with property taxes on new development that would cover inflation but not leave much wiggle room.

Two new revenue streams that have generated plenty of attention for the past few years should come on line during 2018: the city’s share of casino profits and interest from $50 million it expects to net by selling the distribution side of its electrical utility.

Assuming the utility sale wraps up by April 1 and the casino opens next June the forecast is for about $3 million in new revenue.

Which leads back to the capital spending side of the budget.

Council has signalled from the beginning that casino and utility money would not be used to shore up the operating budget or reduce taxes. They were seen as legacy generators with revenue dedicated to future large-scale projects.

That’s the course city staff now recommends. It’s the necessary choice, particularly next year since there is no guarantee when the casino will open or the PDI sale will be complete. If either is delayed capital spending can more easily be put off.

The other new wrinkle also relates to capital spending. As first proposed earlier this year, the draft budget includes $1 million to further beef up spending on sewers and stormwater control, a need that was driven home by the massive flood in 2004. That $1 million represents 0.65 per cent of the total tax increase.

Recognizing that hiking taxes is unpopular, the draft budge recommends an offset for the sewer/stormwater “fee.” An annual one-percent tax increase dedicated to new capital works that has been in effect since 2012 would be cut back to 0.5 per cent.

The 2.85 per cent tax hike that results reflects council’s long-term policy of ramping up capital spending while borrowing costs are low.

It’s a responsible, manageable budget plan – casino and utility sale included.