Some of the city’s wish list of capital projects may get scaled back, delayed or scrapped altogether as council faces a $310 million capital budget deficit over the next decade.
Interim city manager Chris Jardine told council at the Sept. 26 meeting that the coming capital budget challenges are “bigger than we’ve seen in recent years.”
The shortfalls are $10.9 million for 2017, $54.8 million for 2018 and $56.5 million for 2019. This amounts to a shortfall of about $122 million over three years, and more down the road.
“Until we get to 2026, or 25, for the most part we don’t have enough money to do what our aspirations currently outline,” he said.
Council approved motions to accept Jardine’s report for information, and to direct administration to prepare a long-term plan to address this shortfall, and bring it back to council on Nov. 21.
The city’s capital budget is split into two categories. The first is the “RMR” Budget – repair, maintain, replace – which is mostly non-optional items. The second is the Growth Capital Budget, which includes new items including a new branch library and a new arena ice surface in 2017/2018.
Jardine explained administration has gone through the process of prioritizing the list of projects in each budget, ranking them based on two sets of criteria determining their relative importance. Projects that are legislated or needed as a result of growth, for example, were ranked higher than discretionary or “nice to have” types of projects.
Of the $22 million worth of projects ranked for 2017, administration recommends only $7.7 million worth actually proceed. Among the major line items that would remain unfunded in 2017 are the French Canadian Farm project at Heritage Park, Founders Walk Phase 3, Riel Park Phase 5 and an aerial fire truck.
But even with those items cut, the city would need to borrow $17 million for the branch library and $17.8 million for a new ice surface at Servus Place. Repaying those debentures, assuming a 20-year loan, would cost around $2 million per year and require a tax increase of about 2.4 per cent.
Jardine emphasized the problem cannot be avoided entirely by simply deferring projects down the road, because the city’s 10-year plan already projects funding shortfalls every year.
“This isn’t just one tough year we’re trying to get through,” he said. “This is multiple years we need to get through.”
He suggested some projects may have to be revised in scope – for example, the proposed plan for the demolition and rebuilding of Fire Hall 1 for $12 million could potentially be re-imagined as a plan to renovate and repurpose it for $6 million.
“Maybe there are things in that plan that don’t belong. That’s your decision,” Jardine told council. “That’s still not going to fix the problem. We can only reduce a $310 million problem.”
Councillors expressed concern about the difficult task ahead of them, and for councillors elected in October who will have to plan for the 2018 budget.
“Obviously we need to take a long-term look at this,” Coun. Tim Osborne said. “There are things in (growth capital budget) that aren’t happening.”
Coun. Sheena Hughes noted the tax increase noted in Jardine’s report only accounts for the capital projects, and not for the projected increases in operating costs for things like utilities, wages and salaries.
“We’re actually looking at a five-per-cent increase,” she said. “We certainly have a huge challenge ahead of us.”
