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Township faces tough financial decisions

by Kris Svela

KENILWORTH - Councillor and Wellington North finance chairman Andy Lennox painted a less than rosy picture of the financial situation the municipality is facing and must grapple with to get its house in order.

Lennox told council, at a hastily called finance committee meeting after the regular council meeting on Monday night that council is going to have to make some tough decisions when deciding how to spend taxpayers’ money.

He said council will have to consider different financing strategies when it comes to keeping a grip on spending, and how it is done and how it affects taxes.

The finance chairman presented a spreadsheet on projects planned over the next five years, from 2012 to 2016, and how they will impact annual tax increases.

The projects include a new $2.5-million water tower at the north end of Mount Forest, a new $1.25-million pool in Mount Forest, new fire and pumper trucks for Mount Forest and Arthur at an estimated cost of $1 million, $300,000 for new ice-making equipment at the Arthur arena and $75,000 to hire a full-time fire chief for the newly-amalgamated fire service in the township.

Lennox said council will also have to consider its debt servicing, which currently amounts to a cost of $1 million annually to pay interest on Wellington North’s debt. Debt repayment will be part of the spending considerations.

Lennox also included the cost of a disability transit system council is currently considering.

The finance chairman, who opposes township financing of the transit system, said it would cost too much. He suggested if council approves it, outside funding would have to be found to pay for it.

Council is expected to make a final decision on the transit system at its next council meeting. The figures released by Lennox show council would pay $20,000 for the first year and about $44,000 for the second year of operation. Costs would escalate to $235,000 by 2016, a figure Lennox said is based on a similar system operating in Hanover.

For comparison purposes Lennox also looked at tax increases and expenditures in the township from 2001 to 2011, which saw the property tax levy for municipal purposes go from $2.9 million in 2001 to $5.57 million this year.

The increase translated into an annual tax hike of 6.67 per cent or an overall total of 90.5 per cent. 

“Are we prepared to raise taxes the same way we have over the past 10 years?” Lennox asked council.

Mayor Ray Tout said, “It’s important for people to understand we have to raise taxes.  If we’re going to grow ... that’s going to come at a cost.”

For his 2012 to 2016 calculation, which included the five big ticket items, Lennox said property taxes would increase from about $1,520 to $2,056 on a home valued at $290,000. A different scenario presented by Lennox showing longer pay-off periods for projects showed  a smaller increase from $1,520 to $1,988 for the same period.

The mayor said Wellington North is also facing reductions in money it receives from the province for municipal operations. That went from almost $1.286 million in 2001 to $970,000 this year and provincial grants are expected to decline further.

“We know our economic situation provincially is not that rosy,” Lennox said.

The township has also turned to reserves to fund projects in the past, but Lennox said that money will also have to be replaced to deal with unforeseen projects that could crop up in the future.

“You don’t want to blow everything you have in your piggy bank,” he said.

On the transit system, councillor Dan Yake said council will have to make a decision at its next meeting. Yake, who has been spearheading the transit project and prepared a report to council on it, said he continues to receive calls supporting it.

“The report was asked for, the report was presented and there’s going to be a roomful of people wanting to know what your decision is,” Yake said of the issue.

Tout also acknowledged the transit plan will cost “a big buck.” He added, “In the next three years we’re going to have some tough choices.”

Lennox agreed tough decisions on spending will have to be made to ensure annual tax increases are kept to the level of inflation or between three and four per cent.

 

October 7, 2011

 
 

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