Parry Sound Council and Staff met March 21st for round three of the public budget discussions. This followed a meeting on the 13th that had reduced the budget gap to about $450,000. By the end of Wednesday’s meeting the gap stood at $173,000, close but apparently not close enough as there will be a further public discussion on April 3rd, following a Citizen’s Finance committee meeting the day before. Accepting a $173,000 gap between spending and revenue would have required council to approve a 2.5% rate increase, which would be on top of an expected 4% or so assessment increase as determined by MPAC.
A few interesting items popped up that are worth noting as they have an impact that reaches beyond simple dollars and cents. Here is my understanding of what I thought was said and what it means.
All seven council members were in attendance as well as the town staff department heads. There were five people in the audience. James King from the Moose-FM was the only media present. The audience included two people from the Parry Sound Citizen Finance Committee. Much of what was discussed at the council meeting will doubtless need to be ‘downloaded’ to the fiance committee members who were not in attendance. This will take staff and council time better spent on finding solutions.
Here are some of the highlights. If you want more detail you need to start attending the meetings; there is no admission charge.
- By the end of the meeting the budget gap stood at about $173,000. If this gap is not eliminated or reduced it implies there will need to be a 2.5% tax rate increase. This is a little surprising because at the previous budget meeting we were told that a $450,000 gap would imply a 2% rate increase.
- A major part of the budget for 2012 relates to capital items for the public works department. I certainly will not question the merit of these purchases, the current equipment is at best limping around. But these two items, a road plow/salt/sand truck and sidewalk plow will cost in excess of $400,000. Half of this amount will not hit the budget as it will be paid from reserves. The balance though will need to be paid from tax revenues. I’m not sure this is the best way to handle the expense. Given that the two pieces of equipment are expected to last more than a decade it seems reasonable to want to spread the cost over several years. That is unless there are plans to buy $400,000 in capital equipment annually. In this case it seems to be a cost that must be budgeted for annually. But if the expense is exceptional a lease to buy option can be a useful way to smooth out these large capital costs. This option was discussed and was understood to cost more. It still might make sense, especially if the lease can be bought out when there is a relative budget surplus. But this seems to be something that has been rejected for now. How many of us are able to pay cash for a car or home? Spreading costs out over a few years can help with cash flow, even if we end up paying more because of finance charges.
- A fair bit of time was spent on ‘CYA’ discussion, possibly because of the furor in McKellar related to the reeve’s contested expenses. In this case council wanted it understood among themselves and the audience that the shared travel budget was to be ‘shared’, but not necessarily evenly. Some councilors might well travel more than others. As a group they accepted and supported this approach.
- There will be a little bit of financial ‘engineering’ to delay certain very large capital expense debentures so as to reduce the budget gap.
- There was an interesting ‘shuffling’ of about $35,000 for legal expenses related to Parry Sound Power that perhaps sheds a little light on what is going on. I’ll offer more on this in a post in a couple of days.
There were many more issues discussed and wrestled with. Bit by bit the budget gap will be handled with as little impact on the town residents as possible. We’ll see what the Citizen’s Finance Committee has to offer. I expect there will be a slight increase in the tax rate increase unless staff is able to offer additional financial ‘engineering’ solutions or council makes additional cuts that will cause some local pain.
The next public discussion of the 2012 budget will be at the regularly scheduled council meeting April 3rd. Contact a member of the Citizen Finance Committee if you have any suggestions to offer.