In a proposed budget to Estevan city council, 2015 fees and rates will be going up, but taxpayers’ medicine should come in the form of a slightly less bitter pill than in previous years.
In the past two years, the City of Estevan, after years of status quo tax rates, hit ratepayers with back-to-back mill rate increases of more than 20 per cent. The proposed 2015 budget will see a more modest increase, but it’s not a return to normal. If flat taxes were normal in the past, the City is preparing to establish a new normal in the coming years.
Going over the budget proposal in a meeting with media last week, City Manager Amber Smale said the City should be linking any mill rate raise with Estevan’s municipal price index (MPI). While that fluctuates annually, she said the local MPI is about 4.5 per cent, meaning the cost of the City to continue doing business increases by about 4.5 per cent year-to-year.
“That should be the baseline for a property tax increase until it changes,” said Smale. “If it goes up or down, that should always be your baseline. The 4.5 would always be my starting point, recommending to council what we should do. They can change that, up it or lower it.”
“It has been a mistake in the past not to have rate increases,” added Mayor Roy Ludwig. “We have gone too many years with no or little rate increases.”
The City also plans to issue debt of $5 million.
2015 Estevan City Budget Proposal
DivisionExpenses (proposed)
Police Service$4.8 million
Fire Rescue Service$890,000
Leisure Services$4.8 million
Community investment fund$1.8 million
Water treatment plant$858,000
Wastewater treatment plant$472,000
Garbage/recycling operation$450,000
Landfill operation$400,000
Capital investments$7.9 million
Utility investments$1.8 million
General operating budget$23.2 million“The reality of our debt situation is that that has been the funding model over the years so there are no reserves. There’s no secret savings account to draw on. We have to factor in debt to our funding,” said Smale.
The City has been talking a lot about paying down debt, and this issuance will set the repayment plan back one year.
City treasurer Jeff Ward said the City will carry about $34 million debt through 2015.
“We pay down our debt servicing $3.7 to $3.8 million that we pay off principally each year, so if you’re borrowing $5 million, you’re, in essence, netting $1.2 million. So it will be up a little bit and not a huge stall to the payment plan,” said Ward.
The additional debt is meant to manage the legislatively compliant projects the City must undergo this year.
The 2015 budget proposal cuts the general operating budget by one per cent from 2014, with operations expected to cost $23.2 million. In the proposal, that leaves the City with a small surplus of $163,409. Depending on provincial revenue sharing, which may dip this year, Smale warned that surplus could evaporate quickly. Factoring in the utility operations fund, the net surplus from general operations is $1.6 million.
The proposed budget sets out $1.8 million in capital investments to utilities and another $7.9 million in general capital investments.
The bulk of that is a $5 million project at the Estevan Municipal Airport to repair flood damage from 2011. The City has $3 million from the Provincial Disaster Assistance Program for that project that must be used by the end of the year. Another $1.2 million is to go toward the continuing upgrade of Highway 47 north, which includes Sixth Street and Souris Avenue. The City will be going ahead with that project because it has been legally tendered and a contract had been previously awarded.
The guiding principle used to base the budget include legal and legislative compliance, aging infrastructure, rising prices of supplies and services, an expectation of continued growth and residents’ service expectations of receiving more for less.
In addition to the mill rate increase, the budget calls for a utility rate increase of 10 per cent, which will be applied to water consumption, bulk water supply and septage receiving rates.
These new rates are meant to assist in covering capital investments in the City’s water infrastructure, which includes an estimated $240,000 in 2015 to upgrade the water treatment plant’s roof, part of the $1.8 million in proposed utility investments. Regarding wastewater treatment plant improvements in the coming years, Smale said that City will need to spend between $12 million and $18 million over the next five years.
“Some of that is legislatively driven, but a lot of that is just because it’s so old and it’s at capacity,” said Smale.
The budget package includes a five-year capital plan that will see $70 million over the next five years devoted to utility and general capital investments.
In that respect, the City’s new five-year strategic plan has its fingerprints all over the budget as Smale noted they are looking to establish programs that more clearly define what the City must spend in the future on everything from infrastructure upgrades to a fleet renewal program. While the latter program is planned to start this year, with about $250,000 budgeted, other programs like manhole replacement, will be rolled out in subsequent years.
A special budget meeting will be held on Jan. 26 at 6 p.m. in council chambers at City Hall. At that time, the floor will be open to those wishing to provide feedback on the proposed budget. Those wanting to address city council must notify the city clerk by Jan. 22. Council will also accept written submissions by mail and e-mail or by calling 306-634-1802 to provide feedback.
Once the public has been heard, council will consider all reports related to the budget with the intent of passing the proposed budget on Jan. 26. The property tax bylaw will not be passed until the province has set school board rates in March.
