Bonavista facing fiscal crunch as infrastructure needs grow

Residents and business owners in the Town of Bonavista will not see any increases in their municipal tax rates in 2015.

But according to the town's chief financial officer, David Hiscock, future tax increases are likely.

Hiscock said the 2015 budget is bare bones, with no money for extras such as investing in a much-needed water treatment plant.

He said the town may have to take out more loans, or increase taxes, in order to pay for important infrastructure upgrades.

Bonavista is a historic fishing town of about 3,600 residents.

Its population dropped by nearly five per cent between 2006 and 2011, according to Statistics Canada.

A new water treatment plant could cost the town up to $12 million, plus another $50,000 per month for operational expenses.

The time is also approaching for the town to replace it waste-water treatment plant.

If you're getting better services you should pay a little bit more, but you'll never pay enough to be able to cover the costs of these services.- Bonavista CFO David Hiscock

Hiscock said that will likely involve installation of three smaller plants at a cost of some $6 million. 

Hiscock said Bonavista residents would be on the hook for 20 per cent of capital costs if the town can secure cost-shared funding from other levels of government.

What's more, garbage collection costs have increased substantially.

"If you're getting better services you should pay a little bit more, but you'll never pay enough to be able to cover the costs of these services," Hiscock said.

"I mean, you're talking about doubling or tripling taxes, and who can afford that?"

The 2015 budget was adopted on Dec. 18, and is balanced at just over $2.6 million. That's only a slight increase from 2014.

Some towns facing financial collapse

The president of Municipalities Newfoundland-Labrador, Churence Rogers, said Bonavista isn't the only town facing such problems.

Rogers said the provincial government could help by coming up with a new funding formula for municipal governments.

He said the current system is not working, and the consequences of inaction could be disastrous.

"You know, you either do something about this or many of these small towns and municipalities will probably collapse."

Rogers says he understands a new plan may be announced in the spring.