Council reviews capital projects

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This article was published 16/01/2024 (801 days ago), so information in it may no longer be current.

Brandon City Council was told that city administration was taking a different approach to pre-budget meetings at its first such meeting of the year on Monday evening at city hall.

General manager of corporate services Cory Schermann said that prior years had seen initial budget presentations focus on operational and departmental spending, but as the MNP report on the city’s financial sustainability stated last month, the city is lean when it comes to its operations.

Because of the hundreds of millions of dollars’ worth of capital and infrastructure spending identified in that MNP report, things were kicked off with a discussion of those items.

Accounting manager Troy Tripp said the city’s capital spending is defined items that will provide value for residents over multiple years, like buildings and infrastructure.

Legislatively, Manitoba municipalities are required to have six-year capital budgets planned out, but Tripp said Brandon has a 10-year capital budget.

Primary sources of funds for capital projects, Tripp said, are grants, taxes, borrowing and financial reserves. This year’s capital budget has $125 million in spending, of which several projects are continued from previous years.

While the city’s water and wastewater utilities comprise most of the capital spending at around $30 million and $24 million each, Tripp said most of those costs will be paid for by fees paid by residents.

When it comes to how the city will pay for that $125 million in spending, the majority of funds come from slightly less than $50 million in borrowing. The city’s reserves will pay for about $26.3 million, utility reserves for about $10.8 million, development cost charges collected $910,000, about $1.7 million from property taxes and about $36.1 million from “other sources.”

The MNP report and draft budget documents released by the city last week identified $632 million in capital spending over the next decade. Tripp said as staff developed the capital budget, they classified projects as either essential, primary amenities and secondary amenities.

To pay for that spending, MNP recommended the city raise taxes by around 13 per cent over the next four years and by around three per cent per year for the six years after that. That was used as a starting point for administration to work from to lower costs.

All primary amenity projects were deferred for a year, Schermann said, with the city also extending the schedule for replacing its bus fleet and deferring costs relating to transportation infrastructure.

Any projects deemed secondary amenities have been completely removed from the city’s consideration under the current financial situation.

Mark Allard, the city’s general manager of development services, said it was a difficult process to categorize various projects and that council might disagree with some of staff’s decisions.

For the southeast drainage project, Allard said some costs and elements associated with phase one have been deferred from 2024 to 2025. Phase two has been deferred from 2025 to 2026.

Mayor Jeff Fawcett said he’s looking to meet with federal MPs from Manitoba in February and discuss funding for the drainage project, among other things.

An outdoor aquatic centre, Allard said, was deemed a secondary amenity and is no longer under consideration.

The outdoor sports complex will begin construction on the clubhouse this year and artificial turf will be installed on the FIFA-sized soccer pitch due to support from a sponsor.

Park Community Centre construction has been pushed to 2025, with Allard saying some details like designs for the attached child-care centre need to be ironed out.

Though the new provincial government has committed funding to the project, Allard said the city is still awaiting details. The mayor said Brandon East NDP MLA Glen Simard was working on nailing down those details.

While deferrals might save money upfront, Schermann warned that aging equipment might require more maintenance, incurring higher maintenance costs and risking service disruptions if equipment breaks down entirely.

Deferring projects also risks higher costs down the line as inflation continues to raise prices on all sorts of goods. According to Schermann, additional deferrals will likely push tax increases to future years.

The city has about 60 different financial reserves for different purposes. Because each reserve has such a specific function, Tripp said it has restricted the use of funds from them in the past. He said administration is proposing to consolidate the reserves into a smaller amount more generally assigned to categories.

“It’s going to be a bit more simple for us to manage, but it’s going to increase flexibility,” Tripp said.

He said in the past, the city has been stymied by bids for a project coming in at a cost above the amount of money set aside in the related reserve. As an example, Tripp said that if bids came in for a new vehicle for Brandon Fire and Emergency Services, a more flexible approach might allow for funds to be taken out of a more general reserve tied to the city’s vehicle fleet.

Coun. Bruce Luebke (Ward 6) asked how funds from one reserve would be moved to another if there was a reserve with insufficient funds. According to Tripp, transfers between reserves cannot be done at will and could only be done if the city holds a public hearing for each transfer.

Coun. Shawn Berry (Ward 8) said going quickly through the list of the city’s current reserves, he could identify at least five — like the parks and recreation reserve — with more funds in them than are required for projects. If some reserves are already overfunded, he asked why reserves need to be consolidated rather than moving cash to underfunded reserves.

With the city having some overfunded reserves, Coun. Glen Parker (Ward 9) suggested the city use debt more often as a tool to pay for projects where the associated reserves are insufficient.

Brandon has spent the last 10 years slashing every cost it could for the benefit of current taxpayers and reducing appropriations to reserves, Coun. Kris Desjarlais (Ward 2) said, with that approach contributing to the current large-scale tax increases being proposed.

Unlike previous years’ budget deliberations, Fawcett said the hope is to have most of council’s proposed amendments and additions to the budget assembled ahead of time, instead of presenting them for the first time at the beginning of the second day of deliberations.

The meeting was still going on at the Sun’s print deadline.

Further pre-budget special meetings are scheduled for Jan. 18 and 24, with deliberations scheduled for Feb. 2 and 3.

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