Council approves asset plan, but balks at tax hike
Town council Monday night approved a draft copy of a new asset management plan that outlines future infrastructure needs.
But councillors were quick to note a recommendation in the plan to implement a 2.3 percent tax increase every year for the next 10 years is merely that.
Such a plan is a requirement for the town to be eligible to receive a constant funding source from both provincial and federal government to meet future infrastructure needs.
“I’m not opposed to the asset management plan,” Coun. Ken Perry said at Monday night’s meeting.
“But in the plan it states that we will consider raising taxes 2.3 percent over the next whole bunch of years, and I don’t want to tie a new council to the fact that they have to raise taxes 2.3 percent because we passed an asset management plan.
“But if we don’t pass the plan, it’s going to be hard to get grant money from the federal and provincial governments,” he conceded.
“I just want to make it clear to anybody listening out there that if we pass this plan and accept it, that we are not endorsing a 2.3 percent tax increase,” echoed Coun. Rick Wiedenhoeft.
“It’s only a recommendation and it has no binding effect on the municipality to raise tax 2.3 [percent],” he stressed.
“It’s [also] very critical that we pass this asset management plan so that we can apply for government funding because if we don’t pass this plan, we’re very limited in how many grants we can apply for,” Coun. Wiedenhoeft added.
“It’s really critical.”
Coun. Paul Ryan, meanwhile, noted the recommendation for the 2.3 percent increase in taxes dedicated solely to infrastructure over the next decade would be compounded.
So over 10 years, it would amount to a huge increase.
“There is no way that will happen. We just can’t do that,” he remarked.
“We’d price ourselves right out of the market,” Coun. Ryan warned. “Nobody would want to live here.”
Coun. Perry, however, noted the plan indicates both the federal and provincial government are shirking their duties to provide grant money to municipalities.
And on top of that, the federal gas tax revenue program is being decreased each year.
“It’s going to leave municipalities holding the bag more and more and more, all the time,” he lamented.
The plan includes an inventory of the town’s roads, bridges, water system, wastewater system, and social housing, as well as how much it will cost to replace them.
Other assets (such as town vehicles, streetlights and traffic light, and facilities) are not included in the asset management plan but can be added in future.
In a written report to council, Operations and Facilities manager Doug Brown noted “many of these assets lack a proper up-to-date condition rating where, based on the life expectancy of these assets, there is a significant amount of deferred replacement work required over the next five to 10 years.”
“In return, a substantial amount of financial resources will be required to support such an intense capital replacement program,” he noted.
Brown reminded council the town has some 40 km of pipe that are more than 80 years old and in a “critical state.”
“I think this council has done a lot,” he remarked.
“But what we want to do is make sure we can get grant money to match money that’s paid out of the user fees and . . . get a little bit more mileage out of our funding.”
The town’s annual infrastructure deficit is estimated at $3.217 million.
The plan proposed that a 2.3 percent increase in tax revenue will be required over the next 10 years to achieve full funding of the aforementioned five main assets.
Loss of tax revenue makes matters worse.
In 2013, tax revenue was set at $11,551,000. But it is expected there will a further decline in the next three years (2014-16) as a result of adjustments in the industrial assessment of Resolute Forest Products’ pulp and paper mill property here.
“The town’s ability to support the financial component of the [asset management plan] will be very challenging, to say the least,” warned Brown.
The asset management plan will be posted on the town’s website prior to May 31.
It will continue to be a “living document,” meaning the town will continue to update the plan as more information becomes available.
For example, this year’s closed-circuit TV inspection of the sanitary sewer piping will be entered into the asset management plan database, further affecting the valuation of the asset.