Region cuts back on debt financing for new projects

‘The numbers are scary,’ says Fort Erie mayor as budget approval set for Feb. 23

Niagara Regional council placed the first building block for the 2023 budget by approving, in principle, spending $237 million on capital projects this year.

“This year, for us in terms of budgeting, the numbers are scary,” said Fort Erie Mayor Wayne Redekop, who chairs the budget committee, which met for the first time in 2023 Thursday.

“Our challenge is to make those numbers less scary while still trying to achieve the objectives we have established for ourselves as a council going forward.”

The capital budget will fund 150 projects identified and prioritized through the Region’s corporate asset management plan. The decisions on projects and the recommendations from Thursday’s budget committee meeting are still subject to final approval at the full council meeting Feb. 23.

“The capital budget is quite complex because we have to take capital projects across the whole corporation into the levy,” said Todd Harrison, the Region’s commissioner of corporate services and treasurer. “It includes many ‘unalike’ services from long-term care to housing and our facilities, roads and corporate services.

“The asset management process where we evaluate capital projects is very fulsome.

“It reflects the challenges we’re facing while dealing with the underfunding of our capital infrastructure as it relates to projects that we have to move forward.

“It is also a reflection of a realistic approach, both from a funding side and a project-capacity side.”

The Region uses long-term debt, development charges and reserves to fund capital projects.

The most notable change this year is the Region’s move away from debt, which it uses to pay for large growth-related projects and strategic investments.

Large capital projects already approved in recent years include the $400-million South Niagara Falls

‘‘ Our challenge is to make those numbers less scary while still trying to achieve the objectives we have established for ourselves.

WAYNE REDEKOP FORT ERIE MAYOR

wastewater treatment plant and the $180-million redevelopment of the Region’s longterm-care homes — Linhaven (St. Catharines) and Gilmore Lodge (Fort Erie).

“We aren’t recommending any incremental debt for the 2023 capital program,” said Helen Furtado, the Region’s financial management and planning director. “This budget focuses primarily on infrastructure renewal.”

Once approved, the 2023 capital budget will include $71.3 million for roads and bridges, $20.9 million for machinery, equipment and software and $9.3 million for building expansions and replacements.

“I look at the capital budget and the requests for funding and ask myself whether I’m satisfied that the business case has been put forward for each of the requests and if it is something I would support,” Redekop told his fellow councillors.

“Then I asked the question about whether alternative sources of funding can be identified or whether there is any chance the timing could be altered.

“Finally, I ask myself, based on that information, if this was my money, would I be spending this on this particular project — bearing in mind our strategic objectives, our desire to have sustainable infrastructure and the need for us to accommodate growth.”

Furtado said there are always risks and opportunities in a budget and said inflation is a significant risk this year.

“I just received an update that the most recent construction price index for the third quarter of 2022 was 15.6 per cent,” Furtado said.

“Certainly, construction prices are impacted by the volatility of inflation. We are also still navigating Bill 23 and some of the constraints around funding the projects through the development charge fund. So that’s going to put some additional funding on the capital budget.”

Before the final budget is approved, councillors have a series of meetings planned, including one to set the waste management and water and wastewater rates and another one with budget presentation by the agencies, boards and commissions the Region funds, including the Niagara Regional Police and the Niagara Peninsula Conservation Authority.