10/12/11

Budget 2012 Preview

Budget season is almost here. Rather than wait until December, as has been the practice, this Council will start discussing Town spending October 28 with the aim to finalize the budget and 2012 tax requirements by January.

Mississippi Mills caught a few good breaks moneywise in 2011 that will ease the financial burden. Conversely, our new policy on capital reserves presents a challenge.

This year, after our soon-to-retire ladder truck burned, the Town took delivery of a new $750,000 fire truck for just the $10,000 insurance deductible. That relieves us of the need to borrow for a new truck. Also, the final price tag for the new Boal Bridge in Pakenham was $100,000 under budget. We can apply that savings to other infrastructure projects. And, the Town's unionized employees agreed to a new three-year contract with modest annual increases.

In the spring, BMA Consulting advised Council on long-term financial planning. The crux of the plan, to which we agreed, is that we must put more money into reserves and capital projects to cover the cost of depreciating capital assets: roads, bridges, buildings, sidewalks, street lights, and more. We need to find over $50 million in the next 20 years to cover replacement and repairs.

BMA advised us not to borrow to fix or replace existing capital assets (that should come from taxes and reserves). New debt is OK for new capital investments—that is, building new stuff.

To meet the BMA target, the Town needs to find an average of $2.7 million annually just for capital replacements and reserves. We didn’t even come close to that in the 2011 budget. We cannot jump to $2.7 million in one year but must work towards it. (Some of that money will come from the province and feds.) What this means for future taxes, I do not know yet.

If you have budget suggestions--places to cut, stuff to add--contact the Mayor or your Council reps.

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