Pembroke must find $2.6M to balance books 0
Pembroke council has the task of finding $2.6 million worth of reductions in order to balance the bottom line on its 2012 budget before June.
With draft departmental budgets already pretty tight and employees' salaries locked into collective agreements, reserve funds and capital projects seem to be the only areas to hit in order to make a real impact on that amount.
The trick now is determining which projects should be permitted to proceed, which ones should be delayed and which items, if any, should be axed.
On Tuesday, council took part in the first of a series of meetings being held during this month to deal with the 2012 budget. Over a period of two hours, councillors started the lengthy process of going through the draft budget line by line.
Some of the focus of the discussions fell on a list of $3.29 million in pre-approved capital items, most of these already ongoing or tendered out. While much of the cost is covered by debentures and reserve funds, the city still needs to find $766,204 to pay for the rest, a cost which is included in the $2.6 million.
The bigger ticket items include $950,000 for a new aerial truck for the fire department and $250,000 for a winter control combo truck, both being covered by equipment reserves; $90,000 for an ice resurfacer for the PMC, and $75,000 for renovations to City Hall's main floor.
Also under the pre-approved list, some $916,574 of the Agnes Street reconstruction cost (total project $991,000) and $225,000 to cover the first phase of repairing the Pembroke Street bridge, (total project $800,000) are being paid for with borrowed money, which together would add $1.14 million to the city's debenture load.
When combined with existing costs such as the rebuilding of Cecilia Street, now in its second phase, and the Lake Street Bridge refurbishment, plus continuing to pay off the provincially mandated upgrades to the pollution control plant ($5.8 million remaining), and Miramichi Lodge ($5.1 million left), plus the city's share of the Ottawa Valley Waste Recovery Centre ($1.65 million remaining), these new projects will increase the city's debt to $17.6 million by the end of 2012, up from $14.4 million from last year.
Diane Schofield, the city's deputy treasurer, said they have been paying down their debt with payments of $1.3 million annually, and have been keeping that up regularly over the past few years. This keeps their "credit rating" on the good side, and whittles down the principal at a steady rate.
Coun. Les Scott, head of the finance and administration committee, said the city is still in a comfortable position when it comes to increased borrowing, and could, if it was forced to, borrow up to $30 million if the occasion called for it. That wouldn't be an ideal option, but it is good to know it exists, he said.
However, Coun. Pat Lafreniere said just because the city is in a position to borrow, doesn't mean it should, and feels there should be a limit to that.
"We still have to pay that interest on the debenture," she said, which is a cost footed by the city's taxpayers. The councillor agreed sometimes the city will have to tap into reserves or borrow money to get projects completed, but sometimes it needs to be a lot more selective about its priorities and to not try to do too much at once.
"We have several projects which need to be done, yes," Coun. Lafreniere said, "but the discussion should be if we're going to put some of those projects on the back burner for now, to concentrate on others."
She noted Agnes Street still hasn't been approved by council, after councillors put it on hold last month due to higher than expected tender amounts. The city's operations department is due to present a report soon, detailing different options in order to try and reduce the cost.
Coun. Terry O'Neill said it is a frustrating exercise to deal with projects only to find there's still more that needs to be done.
"We fix one street, but then there's four others needing work," he said, making it a never-ending task to keep up. Still, the councillor added council really doesn't have any other choice but to do the work.
Coun. Bob Hackett said while he isn't a fan of borrowing money, sometimes it may be wiser to do so and get the work done now, while interest rates are agreeable and contractor costs reasonable, rather than wait a year and have the project cost a lot more.
Council will continue with its read- through of the draft budget at its next budget meeting, scheduled for Thursday, starting at 9:30 a.m. The city expects to have its budget finalized and approved by June 5.
Stephen Uhler is a Daily Observer multimedia journalist