City finance director urges caution on capital budget
Thursday, Nov 03, 2016 06:00 am
City of Airdrie Director of Corporate Services Lucy Wiwcharuk told the Council Budget Committee (CBC) Oct. 26 they should exercise caution when considering capital budget commitments in the proposed 2017 capital budget.
“Debt per capita getting this high towards the back of the 10-year plan is a red flag for me,” Wiwcharuk said. “I’m more comfortable with debt per capita staying more in line with the median of other mid-size cities…that was put out for provincial benchmarks in 2014. What the plan does is bring awareness to the issue and we can start to make some plans to deliver the outcomes in a different way.”
Airdrie’s 2016 debt per capita is $917 and projected to rise to $1,179 in 2017 and to $2,239 by 2026. According to Wiwcharuk, these projections in the 10-year capital plan are on a non-consolidated basis – they do not include the debt Airdrie Housing Limited uses to operate. The 2014 Alberta Municipal Affairs Financial Indicators show a median debt per capita of $1,666. These calculations are based on audited financial statements and are on a consolidated basis.
According to Wiwcharuk, the city continues to operate well within provincially established debt limits. Provincial debt limits are set at a maximum of 25 per cent of revenue and the City also places self-imposed debt limits, wherein tax supported debt payments are less than or equal to 10 per cent of projected operating revenue.
Wiwcharuk presented the capital plan for the next three years. The 2017 capital budget is $39.4 million. Engineering structures continue to be the bulk of the 2017 plan at approximately $22 million, followed by building and infrastructure renovations at $9.6 million. Land improvements are higher in 2018 at approximately $14 million as the City acquires land for future projects. Building construction forms the majority of the 2019 plan at approximately $38.5 million.
“The majority of these funds to pay for these capital projects are drawn from reserves, grants and debenture,” she said. “We have approximately $12 million coming from grants in 2017.”
According to Wiwcharuk, changes to the Municipal Government Act (MGA) anticipated to come into effect in fall 2017 might allow the City to put other levies into place to raise funds for growth-related necessities, like firehalls and municipal buildings.
Wiwcharuk said she anticipated there being increasing pressures on the City’s reserves.
“My recommendation to this committee and to future committees through the establishment of new fiscal policies is to put plans into place to begin to lift (the value of general operating reserves),” she said. “This can be accomplished by working to ensure specific capital reserves have enough capacity and tax-supported dollars to meet the full major maintenance and replacement needs of assets used to provide city services.”
Wiwcharuk said a proposed redevelopment of downtown, including a multi-million dollar new library building and expansion of city hall, has been put on hold in light of council’s decision to slow the process after significant negative public outcry.
“The assumption made within the budget is to revert back to those (numbers) that were (in the budget) back in the 2016 cycle,” she said. “Construction for both the library and civic spaces have been placed off to occur in 2018. Design dollars for the library are currently in the carry-forward capital budget from 2015. Any potential improvements to the roadway have been slotted into 2020.”
The plan included a lot of “growth pressure,” Wiwcharuk said.
“Significant projects are being contemplated that are becoming more and more important to the community as it grows,” she said. “Staff is seeing projects not like others from past years…which will not be covered through development levies but rather will be funded through the tax base or other grants. There is no specific reserve dollars – in other words, savings – currently in the City’s equity to help with such needs.”
The CBC began meeting Oct. 26, with full-day sessions Oct. 29 and 30. Meetings will continue to be held throughout November. Meetings are open to the public or can be streamed online on the City’s YouTube channel. Dates and times for upcoming meetings will be posted to the City’s website, airdrie.ca