St. John’s Dips Into Savings to Cover Budget 2023

The City of St. John’s is dipping into the slush a little early this holiday season in order to finance their budget for the upcoming year. But what Council really wants for Christmas is an updated City of St. John’s Act so they wouldn’t have to.

It’s a steady-as-she-goes approach, but in order to deliver a balanced budget that covers rising inflation without increasing property taxes, the City is tapping into $6.1 million in savings it had from previous years. (According to provincial legislation, municipalities are not permitted to carry a deficit.)

The result is a projected budget of roughly $333.3 million—a 4.3 percent increase from last year’s $319.6 million. The mil rates for residential and commercial properties are staying the same from 2022. That means 8.3 mils for residential properties and 26.9 mils for commercial properties.

Water tax is going up by $45 for an annual total of $670—a 7.2 percent increase from last year. (For some perspective, last year it had only increased by $5 to total $620.) The increase is being driven by commercial water usage rates going up by 7.1 percent. All the revenue raised from the water tax directly funds the provision of the service.

In order to address the projected deficit, the City is drawing on the accumulated surplus from previous years.

“While we do not like to use reserves to fund operations, I recommend this approach as a means of reducing any additional burden on taxpayers and providing us with the opportunity to add the human resources required to meet the growing demand on levels of service,” Cllr Ron Ellsworth, Finance lead, explained.

More Money For Snow Clearing, Metro and Staffing

Like last year’s budget, the City is putting money towards improved snow clearing, Metrobus routes, and City staffing.

Snow clearing is getting $20,312,897 for the upcoming year, a 7 percent increase from 2022 ($18,983,149). This jump in cost can be attributed to additional staff, equipment and increase in costs like salt.

The Metrobus ZIP network is getting an additional two buses added to Route 2 and one bus to Route 10 during mid-day and evenings on weekdays during the summer.

In addition, City staff is expanding by 21.24 additional full-time equivalents (FTEs). These new positions are for areas like snow clearing, waste collection, water services, fire prevention, animal care, sustainability, transportation engineering, planning, parking enforcement, asset management, privacy, and City buildings. Those new positions will cost a little over $1.9 million.

There are also some fee increases in recreation programs and services to address increases in overhead costs for facilities, materials, staffing and transportation.

These recreation fee hikes are expected to bring in $310,000 in revenue.

St. John’s Sports and Entertainment Ltd gets Major Boost

“St. John’s Sports and Entertainment Ltd. has made great strides in the past year, but the organization is struggling as it emerges from the pandemic,” noted Cllr Ellsworth. 

The SJSE operating grant is getting an additional $961,000 for the next year. In the 2021 and 2022 budgets, the organization got $5.1 million. But for 2023, it’s getting a boost for a total of $6.1 million.

Cllr Ellsworth explained that coming out of COVID, the number of events are down and revenue is down.

“This is a revenue issue not an expense issue,” he added. “The expenses of being open are more than being closed.” He expects the situation to improve as the events calendar for the Mary Brown’s Centre starts to fill up.

Inflation Station

Inflation was a big point of discussion in this budget, as pretty well everything people need to survive has gotten more expensive.

In Council chambers, Cllr Ellsworth laid out some of those higher prices from Statistics Canada data: in October gasoline increased 12.2 percent compared to the same time last year. Food prices have gone up 9.8 percent, as did shelter prices, up 8.8 percent—which he attributed to high prices for home heating oil as well as higher interest rates. He also added that these higher costs aren’t unique to St. John’s.

“We too are feeling the inflationary pressures,” said Cllr Ellsworth as he tabled the budget before Council.

The City is seeing higher prices for contractual services, including materials and supplies, which is costing an additional $6.5 million for the upcoming year. On top of that, fuel expenses for its fleet of vehicles—involved in waste collection, buses, snow clearing, and transportation—is still expected to increase by $4.16 million next year. 

While the 2022 Resident Satisfaction survey told Council that people wanted to see improvements to road maintenance, traffic planning, and road and sidewalk snow clearing, Cllr Ellsworth said they wanted to invest more in these areas as well as others. But for now, they have to keep their eyes on the necessary services—like good quality drinking water, safe roads, affordable public transit, sustainable waste collection, housing solutions, and recreation, parks and trail networks.

“Our goal in planning this year’s budget, therefore, was to maintain existing levels of service and make small, targeted investments that will stabilize the services that matter most and to support our commitments to bolstering the economy and being a sustainable organization,” Cllr Ellsworth said.

Enhanced snow clearing at pedestrian street crossings is getting $306,000—which will go towards eight employees, one supervisor, two leased loaders, and two light duty trucks.

“Living in a City is about more than the basic provision of services, as I mentioned earlier,” Cllr Ellsworth explained. “Residents also want us to balance investment in quality-of-life initiatives.”

The Pedestrian Mall—a summer highlight that’s proven to be a popular draw to downtown—is also getting an investment of $200,000.

With the 2025 Canada Games coming to the City, the budget is allocating $445,000 for new and improved facilities that will hopefully have longer impacts after the games have left town.

Cllr Ellsworth also announced they have decided on a new budget cycle, so in 2023 they will start developing a forecast for 2024 and 2025 as they receive the new assessed value for properties—the “key driver of taxation revenues,” he added.

Unanimous Support from Council—and Calls for More Power from the Province

“I think we are in a very strong position heading into 2023,” Cllr Ellsworth said. He’s comfortable where they are but also cautiously moving forward to preparing for the next budget cycle.

He pointed out the cost of diesel and gas are up by a lot, and if those costs continue to rise there will be challenges. But he said the indications are that the economy is slowly rebounding.

The other councillors present largely agreed with him. (Cllrs Maggie Burton, Debbie Hanlon, and Jamie Korab were absent.) One by one, they took to their mics to voice their support for the budget, often lauding certain programs like the expansion to Metrobus and snow clearing.

But they also took care to voice some of their concerns.

Cllr Jill Bruce pointed to the hike to recreation fees, which could really hit seniors. But she said it’s important that the City can still offer these programs and not cut them.

Cllr Ophelia Ravencroft pointed out this was an exceptional situation given the rate of inflation, and she’s happy that the mil rate didn’t go up. She also said she believes this budget takes into consideration the equity of the City, but understands there are still conditions on it.

“Equity, in a budget like this, will never be truly obtainable until legislative authority is granted to us to investigate the way in which our tax rates work,” Cllr Ravencroft explained. “A single flat residential property tax is not a sustainable or progressive solution. It ensures any individual who’s vulnerable, with less ability to pay—for example seniors on fixed incomes—will inherently be restricted.”

This also limits full participation in society, she added, and expressed hope that this will be an authority granted to them in future.

Cllr Carl Ridgeley pointed out that they were dipping into a surplus for the upcoming year, something they might not be able to do next year.

Mayor Danny Breen also voiced his support for the budget, citing that these are difficult times.

“The prudent management of our expenditures in the past—and the prudent use of the surpluses that we’ve accumulated—has allowed us to be at this point where we’re able to do this, to get us through this challenging period for the residents of the City,” he said.

Mayor Breen also spoke to the authority issue Cllr Ravencroft brought up. He said that St. John’s is a changing city and has changed a lot in recent years; its challenges are significant and growing.

“We’re a modernizing and growing city and we need modern day tools to manage those issues,” he explained. “The fiscal arrangement that Cllr Ravencroft mentioned is important.” The Mayor pointed out that 75 percent of revenue comes from taxation—which puts serious restraints on how the city can sustainably (and equitably) finance its operations.

He said they need to work on a new fiscal arrangement, not only for St. John’s but all municipalities—adding they’ve been talking about it for years and looking at different models.

“The other thing that’s holding us back is legislation,” Mayor Breen added. “It was 29 years ago when we asked the province to rework the City of St. John’s Act. And we’re still here. It’s not done. And the demands and the questions that residents are coming to us with, they want us to be able to deal with them. And we can’t. We can’t be a modern city with antiquated legislation.”

He said the Act was developed before the 1920s, so it can tell you what side of the road you can park your horse on—but is silent about many of the modern day issues we face.

“We have some serious discussions to have as municipalities in this province and as the capital city on how we’re going to develop into the future,” the Mayor concluded.

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