Ni­a­gara con­sid­ers $274M catch-up bud­get

Past zero bud­gets cre­ated fund­ing short­fall for needed work, says coun­cil

The Niagara Falls Review - - Front Page - AL­LAN BENNER

Years of un­der­fund­ing cap­i­tal projects in Ni­a­gara came to a head this week and while ap­prov­ing in prin­ci­pal the largest cap­i­tal bud­get in Ni­a­gara’s his­tory, sev­eral re­gional coun­cil­lors were pri­mar­ily con­cerned about the debt the Re­gion could face in years to come.

“This isn’t sus­tain­able,” said Lin­coln Coun. Rob Fos­ter, while coun­cil­lors met Thurs­day to dis­cuss a pro­posed $274-mil­lion cap­i­tal bud­get — nearly $90mil­lion more than the Re­gion’s $186 mil­lion an­nual av­er­age cap­i­tal spend­ing for the past six years.

And with record-set­ting cap­i­tal bud­gets ex­pected to con­tinue for the next few years, Fos­ter said the pre­vi­ous coun­cil should have been set­ting aside fund­ing to pay for projects rather than fo­cus­ing on cut­ting taxes.

Fos­ter said coun­cil­lors dur­ing the last num­ber of years took “great pride in zero per cent bud­gets or what­ever it was they were put­ting through,” re­sult­ing in the fund­ing short­fall the new term of coun­cil is now deal­ing with.

If ap­proved on Feb. 28, this year’s cap­i­tal bud­get would pro­vide fund­ing for 168 projects — in­clud­ing $21.1 mil­lion to up­grade the De­cew water treat­ment plant, $21 mil­lion for an ex­pan­sion of the Re­gion’s en­vi­ron­men­tal cen­tre to con­sol­i­date waste management op­er­a­tions, $16.1 mil­lion spent on Martin­dale Road work, $13.9 mil­lion in­vest­ment in Ni­a­gara Re­gional Tran­sit to re­place ag­ing buses and $12-mil­lion to de­com­mis­sion a la­goon at Ni­a­gara-on-the Lake’s sewage treat­ment plant.

It would also add $60.9-mil­lion to the Re­gion’s debt, bring the to­tal debt-load up to $388-mil­lion.

Even then, Ni­a­gara’s debt pay­ments would only amount to about eight per cent of in­come — far below the prov­ince’s debt cap of 25 per cent of in­come spent on debt pay­ments, and about 1.3 per cent less than av­er­age among re­gions of sim­i­lar size.

The Re­gion will also draw $57.1-mil­lion from de­vel­op­ment

charges, with the re­main­der com­ing from the fed­eral gas tax, area mu­nic­i­pal­i­ties and other sources.

But since the bud­get would also take $131 mil­lion from Ni­a­gara’s $160-mil­lion re­serve fund, Fos­ter was one of sev­eral coun­cil­lors con­cerned that the Re­gion could in­cur sig­nif­i­cantly more debt in years to come with other planned projects on the hori­zon.

“There’s sig­nif­i­cant debt com­ing in 2020 and there’s a pretty darn ex­ten­sive amount of debt go­ing on in 2021,” Fos­ter said.

In an in­ter­view, Fos­ter added “it seems like there’s just an ab­so­lute ton of things that have to be done over the next cou­ple of years.”

“My con­cern … is that our over­all debt level is go­ing to be at a stage that it’s go­ing to be cre­at­ing havoc on the op­er­a­tions side of things,” he said.

“What were they do­ing with the re­serves?” he said re­fer­ring to de­ci­sions made by the for­mer coun­cil.

“Ob­vi­ously, with what we have now seen with the num­bers that are com­ing out, is that they were us­ing it to off­set tax in­creases. Now we’re stuck hav­ing to deal with that.

“I’m not say­ing whether it’s good, bad or in­dif­fer­ent what they did, but it cer­tainly has tied our hands on what we can do.”

Dur­ing Thurs­day’s meet­ing, Fort Erie Mayor Wayne Re­dekop said the Re­gion’s 10-year cap­i­tal fore­cast pre­dicts $457 mil­lion in spend­ing in 2020, fol­lowed by $323 mil­lion in 2021, re­quired to meet Ni­a­gara’s as­set management plan.

Con­sid­er­ing the up­com­ing ex­pen­di­tures, Re­dekop said Ni­a­gara will likely be bor­row­ing

‘‘ There’s sig­nif­i­cant debt com­ing in 2020 and there’s a pretty darn ex­ten­sive amount of debt go­ing on in 2021.” ROB FOS­TER Lin­coln coun­cil­lor

a lot of money in years to come, too.

“I think it would be very help­ful to have an un­der­stand­ing of where we’re go­ing to be in 2021 in terms of how much debt we have and the ra­tio with re­serves.”

De­spite re­main­ing below the prov­ince’s 25 per cent limit, Re­dekop said, “No re­spon­si­ble mu­nic­i­pal­ity gets any­where close to it.”

St. Catharines Mayor Wal­ter Sendzik said many mu­nic­i­pal­i­ties have self-im­posed debt lim­its.

“In the city of St. Catharines we can’t go above 10 per cent of the op­er­at­ing bud­get,” he said.

The Re­gion’s fi­nan­cial management and plan­ning di­rec­tor He­len Cham­ber­lain said the Re­gion cur­rently has no such pol­icy in place, al­though past prac­tice has been to main­tain the debt limit at below 10 per cent.

Ni­a­gara’s en­ter­prise re­source management com­mis­sioner Todd Har­ri­son said coun­cil will be look­ing at long-term plans while de­vel­op­ing its debt management strat­egy, work­ing in con­junc­tion with lower-tier mu­nic­i­pal­i­ties.

“This is a re­gional is­sue that we need to ad­dress,” he said.

Al­though re­gional staff were asked to limit the 2019 tax in­crease to no more than two per cent, Re­dekop sug­gested it ought to have been more.

“Maybe the guid­ance is wrong. Maybe it should be three per cent.”

Cham­ber­lain said staff were in­structed to bring in a zero per cent bud­get in­crease in 2016, and a one per cent in­crease a year later.

Re­dekop also urged staff to look for ad­di­tional ef­fi­cien­cies within Ni­a­gara Re­gion’s op­er­a­tions.

“Re­cently there were some em­ploy­ees who were re­moved from the em­ploy­ment com­ple­ment. Are there are other op­por­tu­ni­ties for the com­ple­ment to be ad­justed?”

Act­ing CAO Ron Tripp said sev­eral re­views have been done to iden­tify ef­fi­cien­cies, “and we will con­tinue to do so.”

Port Col­borne Mayor Bill Steele said his city staff up­date coun­cil­lors about debt re­pay­ments, show­ing how much deb­t­room is avail­able as past debts are paid off.

He asked re­gional staff to do the same.

GRANT LAFLECHE

Top five items on the Ni­a­gara Re­gion's new bud­get.

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