Since the publishing of my column on the subject of the City’s financial plan, I have received a comprehensive information package on the subject from the City’s administration.
Thank you very much. The documents received raise questions about council’s approach to financial planning.
Financial Plan Bylaw No. 2162-2019 projects annual revenues and expenditures for the years 2019 to 2023. It shows water and sewer rate revenues at a constant level for the entire period — no increases were projected at the time the Plan was approved in May 2019.
The financial statements for the water and sewer funds show healthy annual surpluses averaging in excess of $100,000 per year from 2015 to 2018. The Terrace Standard of May 7, 2020, reported that Council has decided to increase water and sewer rates by 5 per cent in 2020, by a further 8 per cent in 2021, and again by 5 per cent in each of 2022, 2023, and 2024. The cumulative impact of these annual rate increases will set the 2024 rates at 31.3 per cent over the 2019 base rate!
How does Council explain the need for these rate hikes? The City pointed out, according to Terrace Standard reports, that “these funds have not seen rate increasesin over 15 years” and that the current rates are “not able to fund the capital works projects that are coming up in our 5-year plan.”
Mayor Carol Leclerc is quoted as having said that “the lack of increases [is] problematic.” One year ago Council decided to retain water and sewer user rates at levels set before the 2008 financial crisis. So confident was Council that it projected no need for any rate increases at least until 2023. What catastrophic event has befallen our water and sewer systems in the past few months to necessitate such drastic rate increases as the economy enters a severe slump?
The Financial Plan’s Schedule “B” lists objectives and policies for funding sources, distribution of property taxes, and permissive tax exemptions. These objectives and policies, repeated verbatim year after year, amount to little more than feel-good assertions. The funding sources objective, for example, states that “the City will regularly review the proportion of revenue that is received from user fees and charges.” The accompanying policy states that “The City will review all user fee levels to ensure they are adequately meeting both the capital and delivery costs of the service.”
That’s it! Objectives and policies guiding property taxes are equally patronizing.
Council’s financial planning objectives and policies are meagre and tenuous not only for what they say, but, more ominously, for their neglect of expenditures. The Financial Plan embodies neither objectives nor policies to guide the City’s spending decisions. Not a single word on the what, where, why, or how of any of Council’s spending decisions. The City of Terrace Financial Plan leaves citizens with a nebulous understanding of Council’s revenue intentions. What, if any, objectives, goals, or priorities do guide our Council’s spending decisions? We are left in the dark.
Our municipality owns wide-ranging infrastructure (water, sewer, drainage, roads, and parks, etc.), many buildings, and a sizeable fleet of assorted equipment. It costs money to care for and maintain all that stuff. A focus on taxes and user fees is hollow in the absence of objectives and policies to prioritize spending.
I do not question infrastructure spending; what bothers me is Council’s abysmal lack of long-term financial planning.