Last week the Region finalized our levy budget, which encompasses our operating expenses, some capital expenditures, our suite of programs and services, and also our agencies, boards and commissions.
Staff had followed a 2% budget guideline and, to their credit, were diligent in sticking to that number despite unexpected COVID costs created by the pandemic. Similar to the Town, the Region received significant funding from the Province to mitigate those costs. However, financial pressures largely resulting from the Niagara Regional Police budget which came in at a 4.3% increase. Last year Council had approved an addition 40 new officers to respond to an escalation of calls, largely due to mental health pressures, and to preserve our 911 response time. Half of these hires fell onto last year’s budget with the remainder covered this year. This landed the Region’s budget at a 2.9% increase.
However, Council decided to slash the budget down to 1.8% in to assist those in our community who are struggling. They accomplished this by raiding our reserves to the tune of $4.3 million. And I fear it will come at a great cost.
To put this into perspective, a 2.9% increase will result in an additional $46 annually for the average household. A 1.8% increase will result in an additional $29 annually representing a savings of $17. To be fair, the average Niagara household is assessed at $278,000. In Pelham, the average household is most likely double so the savings would be closer to $34. It’s not a lot of money but 1.8% makes for a great headline.
The Region is in a unique position compared to our lower tier municipalities where nearly 84% of our programs and services are deemed essential. The demands placed on these services such as waste collection, policing, EMS, public health and long-term care have directly increased. The pandemic is not over. These units will continue to need priority resourcing and support into the near future as we respond to an ongoing public health crisis. There’s also a question of what role the Region will play in a post-pandemic recovery? The answer to that question is dependent on how the Region is funded and the resources we need to respond. For this reason, our financial health and capacity to service our residents are of vital importance.
So, where do we stand financially? In a recent sustainability review, the Region was found to have the second lowest reserves and reserve funds per household in comparison to other Ontario municipalities. It was also found to have the second highest in long-term debt per household. Additionally, we have the lowest capital additions as a percentage of our amortization expenses, meaning we aren’t replacing our capital assets as quickly as they are wearing out. In other words, our financial position is not great. Actually, it’s quite poor.
(You can find the full sustainability review here: https://pub-niagararegion.escribemeetings.com/filestream.ashx?DocumentId=10798)
The Region has a Taxpayer Reserve Fund dedicated to protecting the Region from emergencies that result in significant and unexpected costs. It can act as a buffer in cushioning the taxpayer from absorbing significant budget increases resulting from unexpected events. One could argue that the pandemic is such an event, but this would ignore the fact that the Region has already received Provincial funding to cover the bulk of these costs. We’ve also undergone significant budget mitigation efforts that have helped keep our budget lean and ease the financial burden created by the pandemic.
Let’s dig a bit deeper into reserves. The taxpayer reserve fund (TRF) was designed to protect the Region, and subsequently the taxpayer, from significant and costly events. Based on that sustainability review, it should have a balance around $60 million. In 2014 the taxpayer reserve fund was half of that, having a balance of $30 million. By 2018, the reserve dropped to $26.4 million, a reduction of $3.4 million dollars. Today, and in consideration of our most recent budget actions, the reserve fund will drop to an estimated $14.25 million. This means the current Council has depleted the reserves by more than four times that of the previous Council in only three years!
I was not in support of the $4.3 million drawings from reserves. I had actually tried to increase the budget by 0.1 % to make a point. If we want to spend money, the reality is we have to collect taxes to pay for those commitments. The West Lincoln Hospital funding is a glaring example of this. The Region has committed $12.6 million dollars but allocated only $1.5 over the next four years. This leaves a deficit of $6 million that needs to materialize in 2024. When that was voted down, I tried to cut something from the budget. I argued that if we want to spend money and we don’t want to increase taxes, then we need to cut something. That was voted down too. It seems that reserved dipping seems to be the long-term financial funding strategy of preference.
But more importantly, as a response to financial hardship, I can say a 1.8% budget increase attains very little. And I say that from experience. I know what it’s like to lose your job and own a home. Saving $34 on my property tax bill would not have helped my financial position, nor would it have allowed me to keep my house. If we’re trying to respond to economic difficulty, we need to invest in the programs and services that lift people up. Programs like subsidized childcare or investments in affordable housing can truly make a societal difference. But underfunding our municipalities in this manner, through raiding reserves, will only hamper our ability to achieve those efforts.
Perhaps it’s time we focused on a new financing strategy. My preference would be one that emphasizes financial stability, protects residents from a roller-coaster of tax increases, and prioritizes spending public money based on where there is the greatest need.