fbpx

Draft budget comes in at $15.7 million

Councillor Catherine King silently takes in the numbers during the budget presentation on January 8. VOICE PHOTO

Capital projects deferred to 2019, 5% tax increase proposed for 2018

BY VOICE STAFF

Town Treasurer Teresa Quinlin presented a draft version of the 2018 budget to Council on January 8, her first budget as Treasurer. Quinlin’s budget is also the first during which the new Community Centre is expected to be operational, and the first since the auditing firm KPMG confirmed the rocky state of Pelham’s finances, as alleged by former Councillor Marvin Junkin when he resigned from Council last November.

Quinlin was initially scheduled to present the budget draft in early December. This date was delayed until December 18, asserted the Town, due to uncertainty over KPMG’s findings and when they would be released. The budget presentation was delayed again after Council ran long during its December 18 meeting.

The draft budget comes in at $15.7 million dollars, up $1.2 million from last year’s $14.5 million dollar budget, or an 8.27% increase.

The Town asserts that approximately half of this increase will be financed by increased revenue and growth, with the remainder to be funded by a tax increase of 5%.

A major portion of the spending increase is a result of adding to the Town’s payroll. Compared to 2017, the budget proposes 17 new Town employees, the majority of which fall under the Public Works department. Two of these employees will be permanent full-time, seven will be permanent part-time, seven are to be fixed-term part-time, with a single fixed-term full-time position to be added.

Town Director of Human Resources Paula Gilbert said that this isn’t the entire staffing request for the Community Centre, and that there will be more requested next year to set up chairs and serve other needs in the building.

“There’s a whole other part that you’re not being shown,” she told Council. “Changes were made in order to make sure that this was an appropriate staffing request to bring forward to Council tonight.”

Quinlin’s budget also includes minimal capital spending of $3.2 million, with substantial deferrals of previously planned captial projects to 2019 and later.

Deferrals include repairs to Poth Street and Sulphur Springs Drive, both of which have been closed for almost a year.

The draft budget does not include requests to take out new loans, neither banks loans nor debentures through the Region and province.

KPMG’s recent report on Pelham’s financial situation revealed that the Town spent reserve funds on projects that were supposed to have been funded by previous loans, meaning that the Town must repay this loan debt in order to replenish the reserve funds.

In total, the Town plans to allocate $17.7 million dollars to restock the reserves. In her remarks to Council at E. L. Crossley on November 29, the Treasurer asserted that $7.8 million of this amount will be received from developers, but has not provided details in the interim as to how and when this money will arrive.

This leaves $9.9 million to be returned to the reserves through loans. On November 29, Quinlin suggested that these loans would be acquired in 2019, though she also said that the final amount of debt taken on could be less than $9.9 million.

In her draft budget presentation, Quinlin wrote of a “possible debt issuance in 2019,” i.e., the Town would take out more loans, for projects already completed.

Most of the 17 new employees seem to be related to the Community Centre. Councillors Richard Rybiak and Peter Papp both asked staff to clearly outline how much running the centre will cost.

“The presentation combined all positions across the Town,” said Rybiak. “It’s very difficult for me to differentiate between positions earmarked for the Community Centre.”

Gilbert said that the budget presentation had combined positions because some new employees will not be working solely for the Community Centre. Papp, who has expressed worries about how much the centre will cost to operate, stressed that Council needed a clearer presentation of its costs.

“This is the largest operating project we’ve ever taken on,” he said. “What’s it going to cost us to run this place, with everything included?”

“I think we need to see that,” Papp said of a staffing and cost breakdown.

In her presentation, the Treasurer presented a revised expected financial picture of the Community Centre, one that predicted a nearly $50,000 surplus in its first six months of operation, before losing about $100,000 annually in subsequent years.

An accounting expert consulted by the Voice called the estimate “a joke,” and pointed out that it “removes current budgeted salaries, and includes summer camp revenues,” without apparently including the camp’s costs among expenses, which would artificially inflate profits.

“Revenues look over-optimistic, which is always the case when these first open,” the expert said. “[The estimate shows] insurance only slightly increasing for such an expensive building, utilities likely understated—the bills will be higher and the arena will be fired up before it gets used. Staff will likely be brought on before it is completed to get trained and up and running. They don’t just start right before it opens. I can’t believe Quinlin is going along with these projections.”

Speaking more generally about the budget, Councillor Gary Accursi expressed interest in reducing the 8.27% increase over 2017.

“I would much prefer to see an increase in the three to three-and-half percent range,” said Accursi. “Inflation is at two or two-and-a-half percent, and a reasonable increase would be keeping up with inflation.”

Accursi said that he wasn’t “trying to pick on anyone, but we’re adding bodies,” and wondered if reducing the number of hires could do a lot to reduce the budget increase.

In response, CAO Darren Ottaway said that the real question was, “Does Council want to see current levels of service? Or does Council want to see a reduction.” Ottaway explained that the requests made in the budget are what staff believe to be required to maintain current service levels.

“If you want to reduce, then, for instance, you could take away sidewalk clearance,” said Ottaway.

Though Ottaway said that this was just an example, Councillor James Lane jumped on Ottaway’s mention of the snow removal.

“Is this something that the Town wants to continue?” asked Lane rhetorically. “There are more subdivisions and more sidewalks being built—is this the best use of dollars for the Town? People probably have to the clean the driveway to get to the sidewalk. I think that it’s a luxury, and we’re paying close to $300,000 for it.”

Following discussion of the operating budget, Quinlin fielded questions on the capital portion of the budget, which called for the use of $3.2 million from the operating budget to be used towards capital work. Roads work made up half of this projected figure, with the largest investment looking to be $1.2 million on the reconstructing of part of Pelham Street.

The budget also anticipated the Town receiving $2.3 million in grants for various projects, including $1.2 million for the remaining cost of Pelham Street, and $414,000 for various road repairs around town.

More alarmingly for Rybiak and Lane, it also called for the deferral of repairs to Poth Street and Sulphur Springs Drive, meaning that these roads will continue to be closed at least until 2019.

“[It looks like we are] going to continue to keep Sulphur Springs closed for the foreseeable future,” said Rybiak. “I’m not sure that’s acceptable…It might be worth looking at how the road might be kept open at some minimal level of operation.”

“Poth bothers me,” continued Rybiak. “There are very few people living there, traffic is light, but on one brief occasion when Poth was locked off on both ends…Poth isn’t a road that we’re ever going to abandon. I’d like to have it open minimally, at least for emergency access, if nothing else.”

The repair of a failed culvert on Poth Street is currently estimated to cost $1 million, and is deferred to the 2019 budget.

Director of Public Works, Andrea Clemencio, did not offer Rybiak much consolation.

“I’m not sure what else I can offer,” she said. “Sulphur Springs cannot be re-opened safely. Opening for light-duty traffic, or anything on those lines, we still assume liability. How do we police that?”

Clemencio said that the Town’s consultants have found no options to open the road temporarily, and referenced legislation.

At this, David Macfarlane, a Fenwick resident in the audience who later identified himself as an engineer, called out.

“What’s the legislation?” Macfarlane shouted. “It should cost one hundred thousand to replace the culverts [on Poth Street].” Papp, who chaired the meeting, asked him to be quiet.

“’FOI,’ yeah, I know. It’s horseshit,” Macfarlane added.

After he had stopped speaking, the discussion continued, though Clemencio was no less hesitant to suggest that a fix in 2018 would be possible.

“I struggle with this one,” she said when asked if a partial repair to allow for Poth’s re-opening was possible. “It might be asking for a repair not within provincial or federal legislation. It would be unfamiliar territory.”

After some cajoling, Council seemed to agree to request that Clemencio return with a report outlining any possible action that would allow for Poth Street to be included in the 2018 budget. After nearly three hours of budget discussion that bumped up to its 10 PM curfew, Council suspended the meeting and was scheduled to resume discussion of the budget on Monday, January 15.

About the Author

The Voice of Pelham
Pelham's independent news source from the heart of Niagara.