SUMMERSIDE, P.E.I. – The City of Summerside's Deputy Mayor and finance liaison, Frank Costa, is presenting the city's budget 2018 preview at city hall today (Monday) at 12 noon. The presentation in council chambers at city hall is open to the public.
Following is his complete address:
INTRODUCTION
A. Welcome
I would like to welcome you all and thank you for attending this budget 2018 preview.
The City of Summerside’s top priority in budget development is service to our residents, and making our community a great place to live, work and raise a family.
One key to our success is our devoted, capable and hardworking staff. Often, they go above and beyond the call of duty, whether it’s to fix a water main break on a Sunday morning or to pitch in to help restore electric power to other parts of the Island in the cold and dark, or to volunteer their personal time to assist local groups and charities.
I also would like to extend my sincere appreciation to my colleagues on City Council. As we come into the last year of our current term, it is an ideal time to pause and reflect on our many accomplishments, not only in this past year, but since we took office in 2014.
With that in mind, one theme for this year’s Budget is one of transition. There has been and will continue to be much change not only within the City, but across our great province as well. It is about evolving and adapting to meet the needs of our community. But it’s also about building on recent successes of our great City by capitalizing on opportunities as they arise.
B. The Year that’s Past
For example, this past year has seen the City enter into a partnership with a world-class organization, Samsung Energy Services to implement a solar energy project and help reduce the City’s carbon footprint. In addition, just recently, the City engaged Honeywell Inc. to help us reduce our energy consumption and to further capitalize on the expertise of this organization well into the future. These energy related programs are proactive, anticipating the impacts that the coming carbon tax will exert on all of us.
Thanks to the tireless efforts of our Mayor and my Council colleagues, we are on the verge of other economic opportunities for our City and the region, which build on our strengths in areas such as energy generation and renewal.
In the spirit of enhancing openness and transparency, the City once again held pre-budget consultations with residents and the business community.
The input and insights received from these involved citizens has a meaningful connection to the main themes of the budget we’ll be following for 2018. Councillors and staff made frequent references to the survey results during their deliberations.
This participatory process is an important building block for more public discussion in the future on a whole variety of issues for the municipality. It reinforces our Council’s ongoing commitment to enhanced transparency and accountability.
C. The Year to Come
As it is with all municipal councils, our Council has had to make difficult choices in the face of competing demands for scarce resources.
The most objective way to do this is use agreed-upon principles and priorities as a foundation for making the choices that need to be made.
One such principle is sustainability.
Citizens have also told us that debt management, economic development, operational efficiencies, and infrastructure are major priorities.
Council has heeded this advice with perhaps its most important budget decision; that is, setting the tax rate. I am pleased to announce, therefore, that there will be no property tax rate increases in 2018.
Maintaining tax rates at their current levels while continuing to provide a high level of service in the face of escalating costs is not easy. But, I am confident that City Council, management and staff are up to the task.
In light of the high service standards our residents demand and deserve from our catalogue of programs and services, we must design them to be as cost-effective and sustainable as possible.
Ideally, we would have sufficient revenues to support all the programs and services that everyone needs and wants.
However, while expenses have increased by approximately 20% over the past five years, our revenues have not grown at the same pace.
In spite of this challenge, we are pleased to engage in a renewed fiscal partnership with the Government of Prince Edward Island which recognizes the challenges of delivering municipal services in an environment of increasing demands.
We also look forward to working under the auspices of the new Municipal Government Act which will strengthen our ability to deliver cost-effective services to our residents, as well as those beyond our boundaries.
The City also intends to strengthen its role as a regional energy provider.
While two new electricity cables are now operational between New Brunswick and Prince Edward Island, the City will assert the right on behalf of its residents to receive safe, cost-effective and reliable electricity.
We recognize the increasing demands on the province’s energy grid and we intend to show leadership on the generation, transmission and delivery of electricity to customers.
However, this comes with a significant annual cost impact on City electricity rate payers, which I will describe in further detail shortly.
KEY MESSAGE #1 – INVESTMENT IN OUR CITY’S CRITICAL INFRASTRUCTURE
A. Capital Improvement Plans
Municipal infrastructure gets people and goods moving, provides safe drinking water, handles our waste, creates spaces for sport and recreation, and helps protect our homes against flooding and other natural disasters.
It is the foundation that the daily life of Canadians is built upon.
The strength of this foundation enables our communities and local businesses to grow, and ensures Canadians have a high quality of life.
To ensure Summerside continues to have sustainable and effective infrastructure in place, I am pleased to announce that the City will be committing over $10 million in capital spending in 2018.
This includes $2.9 million for the electric system, $1.9 million for the water system and $1.3 million for the sewer system, $1.1 million for paving and streets, and $306,000 for sidewalks.
The City accounts for its needs through a Capital Improvement Plan which forecasts our infrastructure requirements over the next decade.
This is a comprehensive plan detailing the scheduling of construction or replacement of roads, sidewalks and sewers as well as the replacement or acquisition of equipment and other needs.
More importantly, it also outlines how the city intends to pay for these needs, and how we may leverage the support of other partners to contribute to these projects.
B. Electricity
In keeping with the need to maintain and renew our infrastructure, it is incumbent upon us to ensure the safety, security and reliability of our energy supply.
To that end, it is anticipated that our electric utility will have approximately $3.6 million of infrastructure to be replaced each year, for the next 10 years.
In addition, we need to plan accordingly to set aside resources in the event that unanticipated requirements emerge over time.
Council has also directed that we make our best efforts to reduce the electric utility’s $1 million accumulated operating deficit. Five years ago, this deficit was more than $4M, so we made significant inroads to knock it back to its current levels, with a plan to have it eliminated in two years.
Furthermore, the electric utility helps support the provision of City programs and services, and has done so for the last 10-15 years.
For example, Credit Union Place as a recreational service provider relies on user fees for 40% of its revenue, with the remainder coming from property tax revenues.
Without the indirect support of the electric utility, the user fees would have to be much higher than their current levels in order to maintain our current pace of cost recovery.
As well, the utility’s support of City programs and services has enabled us to hold the line on property tax rates since the City was formed in 1995.
This is a remarkable accomplishment when one considers that most municipalities across the country routinely increase their mill rates every year in response to increasing costs of services.
I mentioned at the start of my speech that the new electric cables as well as the City’s desire to provide cost-effective electricity will produce a significant annual cost impact on City rate payers.
This impact is projected at almost $700,000.
This is due primarily to two factors: the cost of the City’s share for the two new undersea cables, as well as the possibility that we may need to additionally compensate Maritime Electric for the right to transmit electricity across its grid.
While these costs come with significant impacts on City rate payers, rest assured that the City will continue to advocate for fairness and equity in the transmission and delivery of electricity to all residents.
For all of the reasons mentioned, we believe it is prudent to increase our rates by 2.3% this year. This adjustment is necessary to cope with the escalating costs of operations and capital. It also supports our capacity to support capital renewal of aging infrastructure which is so critical in providing reliable, secure, and consistent electric service to everyone in our community. We also need to set aside sufficient funds in a reserve for future requirements or emergencies, and to address our deficit burden.
C. Water and Sewer
The City of Summerside prides itself in having made many strategic infrastructure investments over the last few years.
- to maintain our existing infrastructure and to keep it working requires ongoing investment.
This is no different for our water system or our sewer system.
As an example, certain sections of our water system date back to the early 1900’s.
This is part of a transmission and distribution network of over 130 kilometers of in-ground pipes, which will cost us $4 million to maintain over the next 10 years.
For 2018, the water and sewer rates will each be adjusted up by 2%, which equates to an additional $1.20 per month, per household.
- are being proactive in adjusting these rates, as we realize that it will help ensure we have the safest and highest quality drinking water system available and an efficient sewer system for our residents for decades to come.
KEY MESSAGE # 2 - DEBT MANAGEMENT
A. Sound, Smart, Strategic Investments
We have made good use of long term borrowing to finance strategic investments over time (such as our Wastewater Treatment Plant, Credit Union Place, and our Wind Farm).
B. Debt - A Top Priority
More importantly, Council has made debt management a priority.
We have confidence in knowing that our financing decisions are based on best practice and are consistent with our Council’s stated intention to appropriately manage our debt.
C. Long-Term Debt Dropping
The long term debt of our general fund is projected to drop to $30.6 million by the end of 2018, a reduction of $2.5 million.
This is due to our program of debt management and repayment, which has given us the flexibility to finance our significant infrastructure, needs while still being fiscally responsible with the tax dollars entrusted to us.
KEY MESSAGE #3 – INVESTMENT IN ECONOMIC AND SOCIAL PARTNERSHIPS FOR OVER ALL COMMUNITY DEVELOPMENT
A. Our Partnerships
To make the community one we all can be proud of, the City has invested much time and effort in developing relationships and partnerships with all sectors of our great City.
For example, we believe very strongly that our youth are the pathway to our future.
As such, we strive to ensure that we can provide the best possible environment for our youth to develop effective life skills and to thrive in what has become an increasingly challenging world.
With that as our guiding principle, the City has developed strong relationships with organizations such as the Boys and Girls Club and Generation XX to help our youth grow into leaders of our community.
The City has also nurtured strong linkages with our seniors groups.
Through our investments in Parkview Seniors Club, the East Prince Seniors Initiative, and the City’s own Age-Friendly Committee, our seniors are able to avail of programs and services which tap into their knowledge, wisdom and mutual support of one another.
In turn, we as a City are the better for their contributions to the fabric of our community.
Finally, one of the hallmarks of a strong community is its support and engagement of arts and culture.
Our City has a thriving arts and culture sector, and we look to organizations such as the Harbourfront Theatre and the College of Piping (among others) to set the tone for engaging our community to support the arts and putting in place a foundation for this support for years to come.
B. Our Economy
- and the business community want more emphasis on economic development and growth.
We will continue to focus our efforts on attracting leading-edge organizations. In addition, we are always evaluating our current service offerings to ensure they meet the needs of our community. For example, in 2018 a community working group will assess our current transit service and discuss ways in which it can continue to meet the needs of our growing community.
As well, we are taking steps to grow the city’s economy and to build on our successes in innovation and entrepreneurship.
While we are blessed with leading-edge thinking and approaches in our city, it is still a constant challenge to attract and develop new lines of business to diversify our economy.
You may recall that the City and Samsung entered into a partnership to develop a solar energy farm here in Summerside. This enables the City to reduce its carbon footprint while helping to ensure it is well-positioned for the implementation of the Province’s new carbon taxation system in 2018. Furthermore, our engagement with Samsung is a mutually beneficial relationship with an internationally-recognized brand: the City can tap into the technological expertise offered by Samsung, and the City provides the infrastructure to serve as a potential testing platform for future projects.
We hope to announce further details in the coming weeks.
C. Our Society
- is all about openly inviting differences of opinion, weighing the pros and cons of going in this direction or that one. While no government can answer to all the needs of all of the people, all of the time, we do reach out into the community for help towards that aspiration.
The City cannot do it alone. And indeed, every year community groups step up to support our citizens.
We all depend upon and appreciate the dedication, commitment and perseverance of the dozens of not-for-profit organizations who deliver critical programs and important services to our community that may otherwise not be available.
To ensure the most fair and equitable distribution of resources and support, the City is undertaking an extensive review of the support it provides to external organizations.
It should be noted that in addition to the $492,000 of financial support that the City provides to outside groups, an
additional $250,000 of in-kind services is also provided to many of these groups to enable them to deliver high-quality services and programming to the broader community.
I am pleased to announce that in 2018, the City will be committing $435,000 in community grants to these organizations, to give them the opportunity to deliver much-needed programs and services in Summerside.
This is higher than last year’s total, and it is in keeping with the five-year average of support that the City has provided through community grants.
Furthermore, we believe strongly in keeping our recreational programs and services accessible and affordable to the community and the region.
At the same time, affordability must be balanced with the need to ensure that the City is able to adequately finance and support these programs on an ongoing basis. Cost recovery benchmarks in municipalities across the country range from 40-60%. The City’s revenues used to recover costs for community services has dipped below the 40% mark. Our community survey indicated that most citizens do favor more emphasis on a user-pay system than a general tax rate increase.
In answer to that citizen-led direction, I am announcing that user fees for programs in Community Services will be increased 3% over last year. In addition, Council will make investments in recreation, parks and health/wellness which signal our commitment to a strong, vibrant and healthy community. For example, we will be investing $118,000 in a new splash park at Legere Park and $100,000 in playground equipment upgrades, along with funding for new aquatics equipment and to support refurbishment of our aquatics facility.
CONCLUSION
A. The Year that’s Past
This past year has seen the City capitalize on significant opportunities in economic development and energy efficiency, building on its success as a provincial and regional leader in innovation.
We’ve heard from our residents that economic development, debt management and infrastructure renewal continue to be major priorities.
We also assess our progress in enhancing transparency and accountability on a regular basis, ensuring that my Council colleagues have good information on which to base our decisions, and to ensure our residents know the basis for these decisions.
Thanks to these accomplishments, we are on the verge of other economic opportunities for our City and the region, which build on our strengths in areas such as energy generation and renewal.
As well, our ongoing dialogue with the community through our public consultations represents an important building block for more public engagement in the future on a whole variety of issues for municipalities, and strengthen our Council’s ongoing commitment to enhanced transparency and accountability.
B. The Year to Come
I look forward to continuing to work with all colleagues on Council as we build upon the accomplishments of the past three years and set a foundation for continued success.
While it is an exciting time, it is also a time for us to focus on sustainability and on “living within our means”.
I believe that the initiatives we’ve highlighted tonight will do both.
With no reduction in services and no increase in property taxes, I am pleased to announce that we are projecting a balanced budget in 2018-2019 (15 months).
C. Thank-You
I want to take this opportunity to express my sincere appreciation to the management and staff of the City for the effective work they do in support of transparency, accountability and public engagement all for the greater good of our community and for the people we serve.
Ladies and Gentlemen, This is your Budget for 2018. Thank you and good day.
Frank Costa
