Report may throw wrench into town budget

Duane Hicks

FORT FRANCES—Fort Frances mayor and council may have their outlook on the 2011 budget change come next Monday after receiving a presentation on a financial asset management report which proposes an aggressive taxation schedule.
At a budget meeting this past Monday, Fort Frances CAO Mark McCaig said “it’s a pretty provocative look at our assets and how far we are funding depleted assets.”
“They even go so far as to look at how we compare with neighbouring communities based on taxes, with the blended cost of water and sewer with taxes,” he added.
“They look at indices such as affordability and everything.
“But to get to my point, what is does more than anything is paint a picture to you of where we are in regards to the gap we that have in funding our infrastructure, and where we should be at and how we catch up,” noted McCaig.
“It presents a scenario, and it’s based on pretty aggressive taxation in order to fix these things that are becoming major problems,” he warned.
The idea behind asset management is for the town to keep tabs on all its assets, their depreciation, and how to save money now to pay to replace those assets in the future.
McCaig said the town has talked about effective asset management for years, and “now the rubber is starting to hit the road.”
“I think we’re going to have to do more than just pay it lip service,” he stressed. “When we discuss issues of taxation, we’re going have to probably use a little more
technical tools, such as affordability indices and everything else, than just ‘what feels right,’ or what we feel the coffee shop feel is about a tax increase.
“Each situation is unique for each municipality, but [the report] pretty clearly takes a defined look at ours and where we’re at,” McCaig said.
“At the end of it, they qualify it . . . . It’s a pretty aggressive taxation schedule for a couple of years.”
McCaig noted the report addresses not just the town’s buildings and vehicles, but water and sewer infrastructure.
But he advised that until they see the asset management report, council should refrain from talking too much about sewer and water rates and taxation.
“If we’re going to get a very specific report that’s going to be a little ‘nerve-wracking’ to take in, we should probably not be setting rates,” noted Coun. Andrew Hallikas.
McCaig said members of council will get copies of the report prior to next Monday’s council meeting so they will have time to read it and ask questions to pose to the presenters.
Budget talk
Meanwhile, the 2011 preliminary operating budget currently sits at $10,294,904, with the preliminary capital budget sitting at $8,537,566.
Treasurer Laurie Witherspoon described the operating budget as “bare bones,” but said council will need to take a close look at the capital budget.
As it stands now, approval of the capital budget would mean drawing $3 million out of reserves, decreasing the total reserve funds by 21.6 percent and increase the town’s long-term principal debt by about 40 percent, which exceeds the long-term debt target (i.e., that long-term debt principal and interest not exceed 20 percent of the previous year’s budgeted long-term debt taxation requirements).
“[The capital budget] is something to maybe look at, maybe prioritize,” noted Witherspoon.
“Personally, I don’t feel that we can do the capital budget as it stands right now, and that we really need to look at prioritizing.”
One of the projects high on the list is the $1.2-million replacement of an aged sanitary sewer line and water line on Third Street East, from Portage Avenue to Mowat Avenue.
“We had a huge break in the line [last July], and that line is very, very old. It’s a critical line,” Coun. Rick Wiedenhoeft warned.
“One of the problems that I am seeing is that our system gets surcharged [overloaded] quite a bit,” explained Operations and Facilities manager Doug Brown.
“When you surcharge a clay pipe, the bedding moves. When you move a clay pipe, it breaks,” he noted.
“When we were replacing around 12 metres of pipe, the pipe was all cracked on the top and the two sides.
“That pipe is a main artery for the town,” Brown stressed.
Brown conceded it was a close call last year. And if they hadn’t fixed it, the main line would have collapsed and backed up the sewer for 1,400-1,500 homes.
The sewer line dates back to 1945 while the watermain dates back to 1920.
Forty-nine percent of the proposed $1.2-million project would be funded from sewer and water reserves while the storm sewer, sidewalk, and road portions likely would be paid for through taxation.
Another sewer and water-related initiative will be the replacement of 174 water meters belonging to industrial, commercial, and institutional (ICI) customers.
Brown said 174 of the 290 ICI water meters have reached the end of their lifecycle and are due to be replaced. Some of them are more than 35 years old.
As well, some of the old meters are running slow and giving inaccurate readings.
Brown also noted the town should consider using the existing smart meter hydro meter communication system so water meters can be read electronically, adding the town should do a request for proposals and get “hard numbers” regarding new meters.
Once that is done, council can determine how ICI customers getting new meters will pay for them (e.g., whether the town will pay for the meters up front, then bill the customer a small charge over a couple years to pay it back).
While the old ICI water meters were going to be replaced at the same time residential water meters were installed, council has deferred discussion of water meters for 2011.
Several members of council indicated Monday that now is not a good time to implement water meters, but they will try to find out when they may become mandated by the province.
The next budget meeting will be held Tuesday, Feb. 1 at 4 p.m. in the committee room at the Civic Centre.
(Fort Frances Times)