Rhonda proposed 5 options. All five plans include provisions to build up healthy reserves. Two options include using debt financing to help cover the costs and three meet costs entirely from taxes.
Two years ago we received a good LTFP from BMA consultants. This month our CFO, Rhonda, updated the plan and added specific data regarding projected operating costs and known capital costs from 2013 to 2030. (For example, we have several expensive bridges to rebuild in the next few years.)
Rhonda proposed 5 options. All five plans include provisions to build up healthy reserves. Two options include using debt financing to help cover the costs and three meet costs entirely from taxes.
The options that include debt financing mean adding more debt. The Town has $7.5 million in debt now, not including the new sewage plant. (Its debt is paid through water bills, not taxes.) One option would add $3.4 million to our debt by 2018. No new debt would be taken on after 2018, and by 2030, the debt would decline to $4.3 million. In this option, property tax increases would not exceed 7% annually. Any big cost surprises would be covered by reserves.
In the options without debt financing, our debt declines steadily as repayments are made but there would be tax hikes in excess of 20% or 30% (depending on which option) in the next few years (mostly for bridges). After that, taxes would drop and rarely exceed 4%.
At the recent Finance Committee meeting, the Council majority endorsed option 5, which includes the debt financing and 7% tax-increase scenario I outlined above. I did not support it because I wanted some taxpayer feedback. I campaigned on “no new debt” and an attempt to keep property tax at the inflation rate. None of the options are complementary to my campaign positions.
It is difficult to hold taxes to inflation because many of our costs (fuel, hydro, etc.) rise faster than inflation. Also, the province is always passing regulations that apply to municipalities without providing the funds to implement those regs.
This LTFP comes before Council for final approval in September.
Opinions?
