Saint John council has approved the city’s 2019 operating budget but the finance commissioner warns it is not sustainable.
The $160-million budget, passed at Monday’s council meeting, maintains the tax rate at $1.785 per $100 of assessed value.
But Kevin Fudge said the budget relies on $7.1 million in provincial “new deal” cash to offset the city’s structural deficit.
Without the money, Fudge said a 10.5-cent tax rate hike may have been needed just to maintain staffing and services.
“We’re not going to become sustainable unless we address the structural deficit,” Fudge said. “I believe our biggest challenge is in our wages and benefits.”
Wages and benefits make up 51 per cent of the overall budget and Fudge said they are growing beyond the amount of revenue the city is generating.
Acting city manager Neil Jacobsen says the city will need to look “much different” at the end of 2019 and 2020. He says the city needs to find ways to secure new revenue streams and reduce costs. “New deal” from the province expires at the end of 2020.
— Brad Perry (@BradMPerry) December 17, 2018
Municipal tax reform needs to be a priority for the city, Fudge said, as relying on property tax revenue is difficult.
He said Saint John’s tax base grew a bit more than forecast but is still lagging compared to other municipalities.
Mayor Don Darling echoed the need for municipal reform and said the city needs a “radical restructuring plan,” which includes new revenue sources.
“We need options other than cutting services to citizens,” Darling said. “We’ll not thrive with high costs and low service, and I guess I’m saying if we’re at that fork in the road on restructuring, I’m not going to support just gutting the place.”
Despite the challenges, Darling said he feels “strangely optimistic” because council and staff are focused in the right areas.
A working group of municipal and provincial officials is expected to present long-term financial solutions early in the new year.
Story by Brad Perry
Twitter: @BradMPerry
Email: perry.brad@radioabl.ca
(Photo: Brad Perry/Acadia News)
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