Saint John faces $1M deficit

Saint John is facing a possible $1-million deficit in 2010 and the spectre of an even more difficult financial situation next year, according to the city's finance committee chairperson.

The city is starting its budget deliberations on Monday night and it must weigh several factors that could make for a difficult year.

Stephen Chase, the city's deputy mayor and chairperson of the finance committee, said snow removal and an upcoming decision on the disability pensions for four firefighters are putting a significant strain on the city's resources.

The deputy mayor said two recent snowstorms have eaten into the surplus the city had leftover from its snow-clearing fund.

"We may lose that savings if we continue to experience bad weather in December," Chase said.

The city is also waiting for an arbitration board to rule on the city's decision to cut the disability pensions of four firefighters.

"If the board rules in favour of the firefighters then the city will have to come to the good of $400,000 that has not been budgeted for," he said.

At this point, Chase said the worst-case scenario for the city would mean a $1-million deficit.

Future budget woes

The New Brunswick government is also preparing for an austere budget in 2011. It has already announced a series of cost-cutting plans.

Saint John, like other cities around the province, is now facing similar challenges.

Chase said he's been through 11 different budgets but he said 2011 could be one of the worst.

The provincial government cut unconditional grants to municipalities by one per cent. Saint John received $19.4 million in its unconditional grant from the provincial government in 2009.

As well, the provincial government has capped property assessment increases at three per cent.  Saint John is one of the many councils that will see less revenue because of the new cap.

The city's property assessment base increased by 4.01 per cent in 2010-2011, but the cap means it will not receive the full benefit of that increased assessment base.

Meanwhile, the city is waiting for the provincial cabinet to decide whether it has to pay nearly $5 million on the pension deficit.

City councillors recommended a plan in November that would freeze municipal salaries and reduce benefits to many municipal workers as a way to combat its pension problem. The plan has been criticized by some groups representing city workers and it can not be implemented without provincial approval.

Chase said the city is also facing higher debt payments for money it borrowed for big capital projects, such as Peel Plaza.

That means, he said, the most the city will have to spend on capital projects next year is about $15 million, about a third of what it needs.