If not for a record $1 million fine imposed on Vale and received by the city, Greater Sudbury's operating deficit in 2017 would have presented a real problem, says a Sudbury city councillor.
At Tuesday's budget meeting, Ward 5 Coun. Bob Kirwan said he was alarmed by the fact the city has had to draw on reserves the past two years to make up the shortfall. This year's deficit would have been $3.45 million if not for the fine money from Vale.
“In 2016, our deficit was $1.8 million at this time,” Kirwan said. “There's seems to be a trend here.”
When the city runs a deficit, it draws on reserve funds to make up the difference. A big part of the shortfall this year – $850,000 – was due to bad weather during the start of the year. Shortfalls in winter maintenance are funded through a reserve fund that's replenished in years with better weather.
But the tax rate stabilization reserve – money set aside to deal with deficits without having to increase property taxes – has been drained by $3 million in the last two years and now sits at just $300,000.
The shortfalls in 2017 include $680,000 at Sudbury Transit and $900,000 in the asset and fleet section. The city is also receiving $170,000 less in net revenue, in part because the city lost some property assessment appeals.
The city also agreed to an unplanned $200,000 donation to the struggling Sudbury Theatre Centre, revenue from the Slots at Sudbury Downs is $40,000 less than anticipated and the city spent $230,000 more than forecast on outside legal advice.
Kirwan said they could be looking at $4 million to $5 million deficit next year, if current trends continue.
“We should face the reality that we don't have a lot of money to spend,” he said. “We're digging ourselves into a hole, and I hope we don't keep spending money we don't have.
“All of our business cases, pretty much, have to be let go.”
City councillors meet again tonight and Thursday in an effort to finalize the 2018 city budget of about $500 million. The property tax hike is expected to be about 3.5 per cent.