City’s debt, spending ‘daunting’
Push for big ticket projects questioned
The City of Saskatoon’s debt is projected to rise to nearly half a billion dollars by 2021, driven by spending on more than $1 billion in capital projects.
The city will pay for slightly less than half of the $ 1.365 billion in bigticket projects like bridges and other infrastructure over about a decade, according to a report to be considered by council’s finance committee on Monday.
The city’s debt, which was recorded at $238.1 million at the end of 2014, is predicted to peak at $495 million in six years and then decline, the report says. The city’s approved debt limit is $558 million.
City manager Murray Totland said despite the big numbers, the city tends to use “conservative projections” and compares favourably to other cities in Western Canada.
“The use of debt to fund projects is a prudent financial tool,” Totland said. “Our debt is no different than consumers buying a house.”
In the last two years, two projects have been completed that required $100 million from the city: the $295.1-million Circle Drive South bridge project, which opened in 2013, and the $122.9-million police headquarters, which opened last year.
The city borrowed $62 million to pay for its $100-million share of the bridge project and $100 million to pay for the police station.
Two more such mammoth projects are on the books to begin this year or next: the city plans to borrow $111.45 million to pay for the $150-million civic operations centre. Funding sources are not finalized for the city’s $252.6-million dual bridge megaproject, but the city is committed to pay $131.9 million to the P3 project.
Todd MacKay, prairie director of the Canadian Taxpayers Federation, questions whether all of the city’s projects represent needs and whether they are all needed at once.
“When you bring it down to per capita numbers, it’s still pretty daunting,” MacKay said of the debt.
A child attending kindergarten in Saskatoon already owes $800, he pointed out.
MacKay said although the city is not paying for the entirety of the big-ticket projects, other levels of government are paying for almost all the rest.
“It’s all coming from the same person,” he said. “It’s the taxpayer.
“Just because you haven’t completely maxed out your credit card doesn’t mean you’re being responsible.”
Totland said the spending on big projects reflects the needs related to growth and the city has a sound strategy to repay the debt.
Of the $238.1 million in debt at the end of 2014, servicing costs are paid for by taxpayers (55.6 per cent), utility rates (29.6 per cent) and the federal gas tax (14.8 per cent).
“I think our taxpayers do want to know what the debt situation with the city is and hopefully have confidence that it’s being managed responsibly,” he said.
Although he doesn’t support the city’s spending, MacKay said he rates its transparency as “great.”