In the coming weeks councillors will have to decide how to make up a $1-million difference between proposed operating expenses and revenues.
Politicians kicked off their 2017 budget deliberations by getting their first look at the preliminary 2017 operating budget this week.
While expenses are proposed to be just above $131 million ($131,045,092), revenues are expected to reach a little more than $130 million ($130,028,292).
Municipalities are not allowed to run budget deficits, so council could either raise taxes by 1.8 per cent, or make alterations to chip away at the $1,016,800 difference.
City finance director Todd Harrison said the 1.8 per cent is around the rate of inflation and that the draft operating budget maintains core service levels.
It also includes enhanced services tied to council’s strategic priorities for culture, cemeteries, preventative maintenance, transit and parks/streets maintenance.
The budget proposes new staff, including supervisors for cemeteries and transit maintenance, a cultural program assistant for museums and additional bus operators.
Harrison said the city continues to see a decline in its debt.
In 2014, the debt was $62.4 million. By 2018, the debt is expected to sit at $49.9 million.
He said the city’s debt to own source revenue is around five per cent, one of the lowest in Ontario. The provincial limit is 25 per cent.
“We’re doing a very good job in that regard,” said Harrison.
He said unlike the federal or provincial governments, municipalities can’t issue debt for operating deficits.
Municipalities can, however, issue debt for capital expenses such as replacing infrastructure.
He said borrowing rates are currently below three per cent.
When asked by Coun. Kim Craitor if the city will ever get back to “pay as you go” and not spend money the municipality doesn’t have, Harrison said: “I doubt it because the need to reinvest in the community is going to continue.”
He said Niagara Falls, like most municipalities, continues to face a large infrastructure deficit, meaning the difference between what the city is spending on infrastructure and what it should be in a perfect world.
Harrison said the “pay as you go” philosophy was rewarded more than a decade ago when upper levels of governments did more to help out municipalities.
“I’m an accountant, I don’t like debt, but at the end of the day some debt is necessary to replace the assets that the community demands. You can’t have falling down bridges.”
Niagara Falls has approximately $800-million worth of assets.
Harrison said the city is “very fortunate” to receive more than $20 million a year from Ontario Lottery and Gaming Corporation for hosting two casinos. Last year, just under $11 million of that went towards capital programs.
He said assessment growth has resulted in $686,000 in new revenues.
That growth, however, could be negatively impacted by assessment appeals (2017 is a re-assessment year) and an increase in the allowance for tax write-offs.
The $131 million in proposed expenses is up $1.9 million, or 1.5 per cent, from 2016.