CLASSIFIEDSADVERTISINGSPECIAL ISSUESSPORTSOBITUARIESNORTHERN JOBSTENDERS

ChateauNova

http://www.neas.ca/


NNSL Photo/Graphic


Canadian North

Home page text size buttonsbigger textsmall textText size Email this articleE-mail this page

NNSL photo/graphic

A construction crew works on a road construction project on 41 Street near the Yellowknife Racquet Club on Sept. 27. The city has been unable to meet infrastructure funding targets from property taxes for 13 years. - Laura Busch/NNSL photo

Capital crunch
Infrastructure funding targets blown, city council told

Simon Whitehouse
Northern News Services
Published Monday, Oct 01, 2012

SOMBA K'E/YELLOWKNIFE
The city is failing to live up to a 13-year-old policy requiring 10 per cent of all property taxes collected be put aside every year to pay for capital projects, city council learned earlier this month.

The revelation angered outgoing city councillor David Wind, who questioned whether council would have borrowed $20 million earlier this year to pay for infrastructure needs if the city had been meeting its targets.

"We run up an infrastructure deficit and the city goes to extraordinary means ... to borrow $20 million to address immediate shortcomings," said Wind, who opposed the borrowing scheme, ostensibly to build a water treatment plant but with a plan to use some of the money to pay for roads, sidewalks and water and sewer line replacements.

"Then the city has to pay the borrowing costs on that money and still doesn't ante up the 10 per cent of taxation revenues every year.

"The approach they are taking is absolutely going to result in a bigger problem down the road than we would have had otherwise."

The city presented an update to its asset management plan at the Sept. 10 municipal services committee meeting. The purpose of the plan is to reduce the $74.1 million infrastructure deficit incurred by the city. Carl Bird, director of corporate Services, recommended putting an additional $366,000 per year from property taxes into the capital reserve fund over the next 10 years, which would mean a jump to $1.846 million per year in property taxes going toward capital starting next year. This is an increase from $1.486 million in 2012.

The city is able to put in additional $366,000 due to a reduction in the city workforce and combining staff roles at city hall, he said.

"Through our review of operations, particularly at city hall, we have identified several positions through attrition and amalgamated some positions into others to create efficiencies at city hall," said Bird.

"Our recommendation is that money stays and gets added to the transfer to the capital to make a sustainable investment in capital."

While the added money is seen as positive by city council, most admit it still isn't enough. The city has never met its capital reserves target of 10 per cent per year.

"There is probably going to be a need to renew the policy around reserves," said Coun. Cory Vanthuyne. "The 10 per cent is probably going to have to be omitted (in the future) because the fact is we aren't reaching it. I think it is good to have reserves set aside, but to have a fixed percentage is a challenge."

Deputy mayor Mark Heyck said there is sometimes resistance by council to transfer more money from the general fund to capital.

"Because property taxes are determined by the general fund, that general fund has to balance out at the end of the year," he said. "Whatever the difference between revenues and expenditures in the general fund - that is made up by property taxes. So there is always a temptation to lower the transfers from the general fund to the capital fund in order to reduce property tax increases."

Mayor Gord Van Tighem and Nalini Naidoo, director of communications and economic development, were both asked Tuesday what 10 per cent would amount to based on this year's budget projections. Neither answered the question by deadline. The city is expected to collect approximately $23 million in tax revenue in 2012. Naidoo said last week the 10 per cent policy is "a target."

"Since this was a target, the (city) has now moved forward with a new initiative - asset management - for the purpose of setting an achievable level of investment to maintain the health of our assets," she stated in an e-mail.

Van Tighem said the policy was adopted when he first came to office and was brought in as a safety measure after Yellowknife's two gold mines closed and the city was considered technically bankrupt. He insists the city is currently in good financial health with adequate reserves and a strong credit rating.

E-mailWe welcome your opinions. Click here to e-mail a letter to the editor.