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Provincial funding cuts costing city $5M, while dwindling reserves squeeze budgets

No plan in place yet on how city will close $1.6B infrastructure gap
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Greater Sudbury's budget will be under tremendous strain for the next three years, members of the finance committee were told this week. (Stock)

Expecting more than $5 million in provincial funding cuts, Greater Sudbury's budget will be under tremendous strain for the next three years, members of the finance committee were told this week.
 
Kevin Fowke, the city's GM of corporate services, gave the committee an update on the 10-year financial plan, including forecasts on how much costs will rise, and how much funding will drop.

Over the next three years, Fowke said provincial funding will be cut by an estimated $5.2 million – $2.4 million in 2020, and $1.4 million in both 2021 and 2022. Operating costs will rise between one and four per cent each year, user fees by three per cent, offset by one per cent growth annual in assessment.

Those estimates include the $200 million the city has borrowed to pay for the big projects, as well as some road construction and repair.

“There remain significant, unmet infrastructure needs that are not accounted for in the model,” Fowke said, a reference to the $1.6-billion deficit in funding to replace roads, water, sewer and other city infrastructure.

Even if a special 1.5-per-cent tax was added to the budget just for infrastructure, “we would be investing less than half of the anticipated immediate infrastructure requirement indicated in the 2016 Asset Management Plan,” Fowke said.
 
And no money has been set aside to replace new infrastructure.

“We are not putting away money for 40 years from now for Maley Drive.”

Despite the challenges, the city's financial health is strong, and our AA credit rating is among the highest in Canada – only three cities have AAA ratings, councillors were told. And Sudbury can take on more debt to finance projects and still be in a sound fiscal position.

Fowke also said a plan is needed to replenish city reserve funds, which have been drawn on heavily in recent years for such things as the tax freeze in 2015, emergency repairs to old city vehicles and successive overages in winter maintenance budgets.

“We do not have a solid strategy to replace reserves,” he said.

Property tax increases should average around 2.9 per cent a year between now and 2029, but spikes are expected in the next three years. To limit the hike to 3.5 per cent in 2020, $6 million has to be found, with the increase peaking in 2022 at just under four per cent.

The cut to provincial funding doesn't take into account the $3 million in lost tax revenue from major mining companies and other businesses appealing their property value assessments produced by the Municipal Property Assessment Corporation. 

To learn more about that, you can read this story here. https://www.sudbury.com/local-news/mpac-appeals-costing-city-3m-a-year-in-lost-tax-revenue-1700664

@darrenmacd




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