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March
1999 Newsletter
Regional
Budget Hits Crisis Point
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Net
Capital Budget for 1999
|
| Road
Repairs |
$24,831,000
|
| Leaking
Landfills |
16,749,000
|
| Mtn.
Police Station |
11,000,000
|
| Repair
Storm Sewers |
5,930,000
|
| Red
Hill Expressway |
5,294,000
|
| HSR
Vehicles |
3,604,000
|
| Homes
for the Aged |
1,514,000
|
| DARTS
Vehicles |
541,000
|
| CSO
Tanks |
59,000
|
| TOTAL |
$69,522,000
|
| Council
told: reduce to |
$3,877,000
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The
budget crisis that Friends has been warning about for the
past three years is now being admitted by everyone. Regional
staff have told the politicians that they must stop borrowing
for capital projects and have recommended that planned capital
spending for 1999 be reduced by 94%. They warn that if this
is not done, the capital budget will require an astounding
22% of the operating budget next year forcing another huge
tax increase.
The proposed 1999 capital budget is $111.5 million, but
about $41 million will be covered by subsidies, or by monies
set aside in reserves. Another $5 million can be borrowed
from internal reserves, leaving $65.5 million that staff
say must be cut from the 1999 budget. It is not clear how
this can be done.
In February, the councillors were given a list of "net"
capital spending scheduled for 1999 and asked to cut 94%
of it (see table). Postponing these cuts doesn't offer a
way out, because staff are also calling for 73% of next
year's capital budget to be chopped, and 54% of the capital
budget in 2001. Only $5.2 million is allocated for the expressway
in 1999, and this is likely already promised to consultants,
and for the completion of the Linc extension.
Cancelling or postponing other proposed capital spending
is even harder because most of it is not for new projects.
Do you cut the $16.7 million required to fix six leaking
landfills (including the Upper Ottawa Street dump). Or do
you eliminate the $24.8 million for rehabilitation of existing
roads or the $5.9 million that is supposed to be used to
fix storm sewers?
These last two items show how desperate the situation is.
Together these two items alone total six times the total
allowable capital budget spending. Surely a well-run government
would not be borrowing money to pay for day-to-day maintenance
of roads and sewers? This is what reserves are supposed
to cover.
The budget list also includes new spending of $11 million
for a new Mountain police station which perhaps could be
postponed. There is also $4.1 million for replacing of HSR
and DARTS buses; and $1.5 million for the renovations to
Macassa Lodge.
Staff have been warning councillors about an impending crisis
in the capital budget for several years. In 1996, for example,
they pointed out that council's policy of building new projects
without raising taxes was unsustainable. In that year, they
also warned that the maintenance budgets for the water and
sewer system were far less than they should be. They noted
that in the 1990-96 period alone, maintenance spending on
sanitary sewers and waterworks was over $400 million less
than required.
The
staff report clearly explained this problem to the councillors.
The first paragraph of the report stated: "The scope of
the capital program has continued to expand over the last
few years; however there has not been a commensurate increase
in the funding for the program. Maintenance, rehabilitation
and replacement of existing infrastructure has been deferred
as funding has been redirected to special projects such
as the Freeway, ParCIL and the Emergency Communication System.
Other large capital expansions are now being considered
in the Capital Budget that would further widen the gap between
the needs and the allocation of funding for maintenance,
rehabilitation and replacement of existing infrastructure."
Staff says that council must now face the crisis they have
been creating over the last decade and more. The taxpayers
are outraged over last year's increases, and next year the
voters get another chance to clean house. What will the
councillors do?
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