I
don't blog a lot and certainly not on any kind of regular schedule, but after a
couple of days deliberating the City’s Operational Budget, here I am at the
keyboard, with a lot on my mind.
On
Monday, we will continue deliberations and the final vote will take place on
December 15th. While there are a couple of motions to be debated, there aren’t
a lot of suggested changes at this point.
As
most people are aware, there are many fiscal challenges in our province and in
our city. The primary issues with this year’s municipal budget include:
1.
A
decrease in the unconditional grant from the province of $3,219,293. Since 2010
the grant has gone from $11,593,117 to $5,296,251 a year, a decrease of
$6,296,866 in 6 years. However, this wouldn’t be so bad if the formula was
fair. The way this grant is calculated today, Moncton is penalized for being
successful. We are in a “pool” with
Saint John and Fredericton…there is a pot of money that is divided among the
three of us. Since Moncton is doing well, we get less money. I don’t have a
huge issue with this, since, as we all know transfer payments are a Canadian
tradition. However, I do have a problem with the fact that when this formula was
presented, there was another component to it. This other component involved
non-residential tax compensation and the formula was supposed to return to
municipalities the business tax that they generate. Some have estimated that
this would be in the $12 million range for Moncton this year. In my mind, this would be fair. As it stands
now, we are being penalized for being successful.
2.
Declining
assessments. This is an issue because we had budgeted for more growth (revenue)
than we are actually experiencing (subdivision development hasn’t maintained
the growth rate that was projected). While this isn’t necessarily all doom and
gloom (I’m a big believer in smart growth, not necessarily all growth), it does
affect our financial situation. As well, other sources of revenue are down.
3.
There
are a lot of unknowns. We don’t know how much more the provincial grants will
decrease, we don’t know what the final tally will be for the June 4th
event, we are entering CUPE negotiations, and we have a lot of upcoming major
capital requirements, including the DT Centre, a $42 million police facility,
the NW Centre, a new fire station, infrastructure requirements, etc.
4.
Snow.
So,
what should we do? There are lots of options. We could raise taxes, we could
cut our budget further (however, at this time it seems pretty bare bones, and
there isn’t a tremendous amount of flexibility when you consider that Fire,
Police, fiscal services and wages and benefits amount to 77.7% of the total
budget of $144,567,233 or $112,328,740…leaving $32,238,493 to do everything
else that the city needs to do. As well, 19 jobs will be eliminated in the next
two years, primarily through attrition), we could withdraw from reserves and/or
we could have a salary slippage adjustment (basically a hiring slowdown, not
filling empty positions immediately).
Because
there are so many unknowns, our CFO is recommending that we not raise taxes (there
have been no tax increases in the last 6 years and the tax rate has increased
by $.06 since 2000) but that we acknowledge that we have a structural deficit
(we are consistently spending more than we are bringing in), that we
immediately start on a 3-year projected budget in April 2015 (at this time we
should know some of the unknowns mentioned above) and develop options from our
long-term plan for balancing our budgets from 2016 onwards.
In
order to accomplish what our CFO is recommending, we are going to have to have
some very open and frank discussions. Council will definitely need to hone our
priorities (currently we have 16 operating priorities and 5 capital project
priorities, which in my opinion, is WAY too many). Is it possible? I believe it is, but it is
going to be tough. We are going to have to have a deep look at the way that we
do business. We need to embrace innovation in all of our businesses (all 82 of
them) and empower staff to be much more entrepreneurial. (I’m thinking here
about our Urban Planning department and the money that they raised this year to
do an important community plan, or Parks and Rec who accessed corporate money
for more trees.) We also need to focus on sectors where we bring in
revenue…Codiac Transit will probably never break even, but if we acknowledge
the importance of public transportation, we need to find ways to increase the
revenues and decrease the subsidy (for example, only .4% of Codiac’s budget (they
have a projected deficit of $7.4 million) is for promotion…if their goal is to
increase ridership and revenues, then a much more aggressive and comprehensive
approach is necessary, IMHO…I’m thinking of the low hanging fruit like
hospitals where employees pay $25 a month to park and a bus pass costs
$62…busses pass by both hospitals every 15-30 minutes all day, every day). Another
item that is hard to analyze is the fact that 250 City employees will be eligible
for retirement in the next 5 years. Additionally, perhaps we need to look much
more closely at the 82 businesses…perhaps there are areas of business that the
City shouldn’t be involved in at all.
Another
very important conversation that MUST take place is with our provincial
government. We need to meet with our new MLAs and let them know how difficult
the cuts have been for us, and that by penalizing Moncton, our province’s
economic generator, we are inadvertently making our whole province suffer. We also
need to speak with them about giving us the tools we need to be successful. We
need to talk about:
·
the
hotel levy
·
arbitration
settlements
·
Tax
Incremental Financing (TIFs)
·
the
inequities of the tax formula
·
permissive
legislation for by-law enforcement (i.e., the re-vamping of the Municipalities
Act)
·
their
MID commitment (it is set to expire in 2015), etc.
We
have an excellent opportunity before us to create some important and lasting
change in our province. It is time for the province and the municipalities to
work much closer and more collaboratively…after all, the entire population of
NB makes us the 49th largest city in North America!
I
believe that we also need to engage citizens in these conversations. Government
can’t do it alone. We need everyone to step up and get involved. There are a
lot of people who care deeply about the future of our city. All citizens need
to be involved in helping to make the changes that are needed. (You will notice
that I wrote “citizens” and not “tax payers”…because I believe that citizens
are much more than just tax payers.)
And,
for the elephant in the room, our DT Centre. If you’ve read my other postings,
you will know that I’m a supporter. You may ask how I can support this
during trying times like this? Well, I think that it is during times like this
that bold and audacious ideas are necessary. When I think about Moncton’s past,
particularly the closing of CN, Eatons, or the renovation of the Capitol
Theatre (20 years ago when Main Street was a wasteland), I think of a community
that has so much spunk, determination and ability to overcome. This is just
another example of our city’s ability to not let the tough times get us down.
We have planned, we have budgeted, we have engaged…we have proactively created
a vision of what our future could look like. A vision of our DT where people
live, work and play…where there are lots of residential opportunities for young
innovators who don’t want cars, who want to walk to work, who want to live
where they play. For empty-nesters who would like to downsize, get rid of their
car, be able to walk to a concert, and grab dinner on the way, browsing shop
windows as they walk to the Centre.
Highfield
Square is gone and we own the land (all $12.5 million of it). City Council
approved the land purchase (unanimously) and has been putting money aside for years,
much like anyone would save for a home. Who goes out and just buys a house
without saving for it? This project has been discussed for at least a decade,
albeit much more seriously in the last 3 years and many councillors included
their support for it in their election platforms.
Will
the DT Centre be the cure for everything that ails our DT? Absolutely not.
However, it is an important piece of the puzzle. Moncton has been seen as a
visionary leader in Atlantic Canada and I think that we need to continue in
this direction. Doing nothing, is not an option. Putting a focus like this in
our DT sends a clear and vital message that urban sprawl can’t continue. It
also speaks to the many developers who have invested in our DT, but are
waiting. Waiting to see if Moncton can do it, if we can continue to create our
own success. Sometimes someone has to take the risk and get the ball rolling.
The waiting game needs to be over. Premier Gallant needs to put aside partisan
politics, see this project as the economic stimulator that it will be (the
province will get $6 million of their $24 million investment back on the
construction alone). I spoke with MP Robert Goguen the other day and he said
that the Federal government is ready to go, but they need the province to
confirm their support.
Being
a leader is about making tough decisions that look to the future, decisions
that not everyone will agree with. I know that when I think about the DT
centre, I think about my kids and their friends. They don’t have much of a
relationship with our DT because they don’t see the appeal. However, having the
opportunity to attend a game or a concert, a Cirque de Soleil performance or a Broadway
Musical (Jersey Boys is playing for 6 nights at the London Budweiser Centre),
they will be in our DT, experiencing all that it has to offer. They will take
the bus, wander around, meet up with friends, enjoy their outing, grab a
snack…and be proud of their city. Yes, they may go away for school, but there
needs to be something to draw them back. For many of the Millennials today,
they can work anywhere. Geography isn’t as important as it used to be, which
makes quality of life investments like a state-of-the-art sports and
entertainment centre vital to the equation of keeping our youth here. (And, to
the naysayers who believe that a centre like this should be financed completely
by the private sector, all I can say is that I would like to see some examples.)
Yes,
we are living in trying financial times. However, I like to look at our
situation through the lens of abundance and hope rather than scarcity and fear.
New Brunswick has so much that is good and wonderful and hopeful. We have so
many opportunities before us. Yes, there are some very difficult decisions that
will need to be made and we are going to have to think about things in new and
innovative ways, but I believe that we can do it and create a great future for
our kids in our city.
I
would love to hear your thoughts about all of this, particularly ideas for
cutting costs at City Hall, creating efficiencies in the services that the city
provides, possible ideas for innovation or outsourcing…or ideas like this: http://www.theglobeandmail.com/news/toronto/a-thinner-blue-line/article21978969/.
Thanks
for reading! I look forward to hearing from you.
