Saint John's proposed $160M budget inspires confidence and jitters

The worrisome state of Saint John's finances was laid bare Monday night as council studied a proposed $160 million budget, which includes some short-term financing from the province that made one councillor think of a "doomed renovation job."

The proposed budget, up about $8 million from this year, would keep the same tax rate as the past 11 years: $1.785 per $100 of assessment. 

But the budget would also focus heavily on financial planning to dig the city out of a $235 million debt accumulated over decades. 

"Although the city is facing one of the biggest financial challenges it's ever faced, I also believe the financial acumen of  council has never been higher," Kevin Fudge, the city's commissioner of finance, told council when he presented the spending plan. 

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Fudge said the budget is inherently risky, since almost $8.9 million comes from short-term funding promised by the provincial government. The money is part of a three-year, $22 million financial aid package announced in February that stipulates the city can't make more than minimal cuts to front-line services.

David Merrithew, chair of the finance committee, said the restrictions placed on the financial aid package make it difficult to solve the city's real problems. It struck him as an arrangement for a "doomed" house renovation.

We have a very positive and bright future. I think that in less than 10 years, we can be thriving, turned around, lowering costs for our citizens.- Mayor Don Darling

"We said, 'We've got this house, and the house has leaky windows, a bad roof, and it's got a draft in the door and there's hardly any insulation in it, and it costs $2,500 to heat it'.

"And the province says, "Look, we want to help you, so we'll pay for the heating bill for three years, but do not fix your windows, do not put insulation in it, do not fix your roof or your drafty doors."

At this rate, without making necessary cuts, Merrithew said, the budget of 2021 will have a deficit of $12 million to $14 million.

"That's the magnitude of what will happen if we don't rightsize ourselves."

Long-term plan in the works

The city says the first six months of 2019 will be similar to 2018 in terms of spending, while it develops a 10-year financial plan to work around barriers to cost reduction.

The city announced earlier this year that it needs to reduce costs by $15 million to close the deficit and to find $15 million in new funding to reduce the tax rate. 

Many of the city's operating expenses are fixed, Fudge said, and there are collective agreements with the city workforce that also make it hard to reduce some costs. These are just some of the issues that need to be tackled in the long-term plan, he said.

'It's not our money'

Coun. Donna Reardon was on board with the long-term plan idea.

"There's an old saying that necessity is the mother of invention," she said.

"Long-term financial planning is a new concept here in Saint John. Now that would probably seem crazy to anyone else running a $150 million operation, but that's the way it was here."

She believes that cutting some public services, such as garbage pickup, could help to reduce some costs.

"I think these bold moves are in our future and I'll be voting for all of them," she said. "It's not our money."

'A huge deficit'

 Deputy Mayor Shirley McAlary said one of her biggest concerns was about the short-term money.  

"Yes, the province may come through in 2019, and I can even see them coming through for 2020, but if we do not address this problem, we're going to come up on the end of 2020 with a huge deficit, not knowing what to do, and I think that is a very very awful thing to do."

Mayor Don Darling was more optimistic about the city's financial outlook and, like Merrithew, thought of a reno. 

"I use the analogy of wallpaper," he told council. "You buy a house and think you're going to tear one layer down, and you end up tearing 23 layers down. So how do you do that constructively? We're not battling, but we're facing our reality."

"We have a very positive and bright future. I think that in less than 10 years, we can be thriving, turned around, lowering costs for our citizens."

The next step for the budget will be further revision, given this feedback, before the finalised report is released later this year.