by Deron Johnston
Every municipal budget has an enormous amount of information contained in it. It takes a lot of time to unpack it, read it, analyse it and then write or ask questions about it. How do you choose what to write about? Here’s a couple of items that have a big impact on the future fiscal health of the municipality.
Currently, the North Grenville Municipal Centre operates, on paper, at a loss of $1.77 million per year, with revenues of $1.35 million and expenses of $3.12 million. Municipal staff stated that residents should keep in mind that they don’t charge themselves for using the office space they occupy in operating the municipality. In addition, the revenue from all of the programs and camps that use the Municipal Centre is not allocated to the building, but to the department that runs the programs. Lastly, municipal staff don’t want to charge too much money for rentals, which would make it difficult for local teams, organizations, and groups to afford to rent municipal space. If prices go too high, revenues for rentals could go down, because there would be less interest in renting.
The debt still owed on the NGMC is almost $8.5 million dollars, plus interest. The debt is not a mortgage, but a somewhat complicated series of bond offerings and two other loans from CIBC. One loan from CIBC, for $1.6 million, is expected to be paid off in 2026, and the other CIBC debt of $708,000 in May 2020. There are several different interest rates involved in these debts, but, overall, the last of the series of debts are two bonds that are currently scheduled to be paid off by 2035. This type of complicated financing was apparently common for large municipal projects back when the NGMC was built. Quite often, time-lines for applying for provincial and federal grant money don’t line up exactly with major municipal projects, so this type of financing was necessary to take advantage of grant monies.
The anticipated property tax rate increase of 2% in this budget will actually be higher in real dollars. Residents will be paying more in dollars than the 2% increase, because of the recent property value increases from the Municipal Property Assessment Corporation. This means that the municipality will collect an extra $470,000, approximately, from residents above the amount projected to be collected by the 2% property tax increase. So in real dollars, the property tax increase will really be about 3%, thanks to the combined increase in municipal property taxes and the increase in municipal property values.
People have asked why the municipality raised the property tax rate over 6% in 2015 and has since committed to a series of consecutive 2% property tax increases in future budgets. It appears that, over the past ten years, there have been a series of questionable decisions made surrounding tax rate changes in North Grenville at budget time.
Here’s what the tax rate changes have been:
In 2006 the change was -12%
In 2007 the change was +7%
In 2008 the change was +4%
In 2009 the change was -5%
In 2010 the change was -5%
In 2011 the change was -5%
In 2012 the change was -3%
In 2013 the change was 0%
In 2014 the change was 2%
In 2015 the change was 6%
In 2016 the change was 2%
In 2017 the change is anticipated to be +2%
With the knowledge that revenue transfers from the provincial government to municipalities have been declining since the late ‘90s, it’s difficult to understand some of these changes. They contributed directly to the depletion of municipal reserves, because of the reduced revenue. These reserves needed to be replenished through the recent tax rate increases that we’ve seen over the past three years and the long term commitment to future increases. Combine this with the provincial infrastructure deficit that municipal staff and council keep referring to, and it appears that we have a long recovery ahead of us from these revenue losses.
Thankfully, the municipality now has a long term financial plan to help with this recovery.