Council facing another tough budget

Tomorrow morning council sits down with administration and department heads to begin trashing out this year’s city budget, a process that will continue all day Friday and, if necessary, into the weekend.

Tomorrow morning council sits down with administration and department heads to begin trashing out this year’s city budget, a process that will continue all day Friday and, if necessary, into the weekend. And while the 2010 deliberations might have been the most challenging he’d seen on his watch, municipal manager Trafford Hall says this year’s will be a complex affair too. Last February council’s decisions were made against the backdrop of the Eurocan closure and knowing that most of the $3 million plus tax revenues it got from the pulp and paper mill would disappear this year. “We had to really pull in our horns and change a variety of program objectives, cost control being the main one,” Hall recalled. There were also some “difficult” cuts, a freeze on capital expenditure and taxes were raised 20 per cent. The plan at that time was also to reduce operating expenditures by 10 per cent, “and it looks like in some of the areas the guys dug really deep,” he said. As a result “it looks like we are going to come in with a good-sized surplus.” While under normal circumstances such a surplus would be seen as evidence the city had over-taxed, Hall emphasized building that surplus was exactly the intention of last year’s budget because that surplus would act as something of a buffer against the loss of the Eurocan taxes. The hope last year was the city could go back to as just above inflation tax increase “until such time as we had stabilized our expenditures”. And he figured it would take about three years “to bring current expenditures in line with current revenues in the new reality.” That assumed a continuing downward trend in expenditures and Hall cautioned that while they had made significant strides in 2010, they might not necessarily be able to achieve reductions of the same magnitude this year. He pointed out there had been an attempt last year to make savings in recreation – a reference to the planned closure of KIR – and there was quite a backlash [in fact council bowed to the pressure and rescinded the closure]. There had also been an attempt to save money on snow clearing and again there had been a backlash, one that Hall suspected would result in council reversing that saving as well. While he was did not know whether council over the next couple of years could withstand the pressure against cost savings, Hall was adamant on one thing. “If we got back to business as usual, we’re going to have to increase taxes by another 8-10 per cent on top of inflation.”