Letter to the Editor

Sioux Lookout's 2019 Budget

We're responding to the passing of the 2019 budget on February 28th as reported in the March 6th edition of the Sioux Bulletin.

The 2019 budget process was more open and transparent than any of the four years of the previous Council’s term. However, there is still room for improvement; at some meetings including the February 28th, there was no opportunity provided for the public to comment at the end of the meeting. Was Council tired of listening to the public? Also, the Council should think of providing more input opportunity for the public before they ratify the final budget.

The meetings were well attended, mostly because of the excessive taxation and tax increases over the past several years, and to encourage the new Council to become more fiscally responsible. Unfortunately, the 2019 budget isn’t fiscally responsible as the Council passed a 1.7% tax rate increase on top of the 3.7% increase provided from the increase in MPAC assessment. Most of the MPAC assessment increases are for existing properties and a small amount is due to MPAC assessments of new construction. This means the tax levy for 2019 is increasing by 5.4% and most of the increase falls on existing properties. This is more than double the rate of inflation. Who gets an annual increase of 5% in their income? On the positive side, Council was successful in holding out so we did not get the original Draft 1 proposed 8% plus increase to the tax levy.

In 2014, the year the previous Council took over, the total Municipal tax levy was $8,542,358. The proposed budget is projecting a tax levy of $11,002,298 for 2019. That is an increase of 28.7% over 5 years or an average annual increase of 5.7% per year. These kinds of increases are unsustainable without a large increase in the tax base from new construction and have to stop. News stories have demonstrated other communities, such as Kenora and Dryden are being responsible to their taxpayers and are decreasing their tax rates to offset high MPAC assessment increases. As a result, their taxpayers are seeing increases in the tax levy of 2% to 3%, closer to the rate of inflation.

The biggest problem area of the 2019 budget stems from the Operating Budget that absorbed $384,829 from the increase in MPAC assessments. In addition to this, the Treasurer stated they had a $90,880 shortfall in the Operation’s Budget. Based on these numbers, it is reasonable to conclude the Operations Budget is increasing by $475,709 in 2019. 

Draft 3 projects an increase in the Economic Development budget of 43% and most of this is due to an increase in wages and benefits of $39,943, an increase in the amount spent on contracted services of $20,000 and due to the funding of the energy plan in the amount of $50,000. Draft 3 projects an increase in Corporate Services budget of 23% and most of this is due to a $124,506 increase in wages and benefits. The Clerk’s budget projected increase is 11.5% and most of this is due to a $67,355 increase in wages and benefits. The Planning budget is projected to increase by 130% and most of this is due to $116,500 being transferred to reserves. The budget for the Memorial Arena is projected to increase by 58% due to a $120,068 increase in wages and benefits, $11,300 due to an increase for contracted services, $50,067 due to an increase in utility costs and $20,000 due to internal transfers.

In summary, the bulk of the increases in the Operational Budget seems to be due to the hiring of new staff for administration. The Mayor seemed reticent to allow the scrutinizing of the Operations Budget, as he responded to one Councillor’s request to do so at a previous meeting, by saying that he didn’t want to go through the Operations Budget line by line. During the Draft 3 budget meeting, the Mayor refused to allow another Councillor to question the CAO about staffing and the hiring of more staff. Basically, questions to the CAO were off limits. Transparency could improve significantly by allowing Councillors to question the CAO regarding operational cost and hiring, and by allowing the Operations Budget to be scrutinized in depth. Having said that, the Treasurer did provide an in-depth review of wage breakdown and Operational Budget changes in Draft 3 meeting package, which was a significant improvement over previous years.

The increase in utilities for the rec center rose by $50,067 from 2018. Why is this? Were utility costs underestimated in the 2018 budget? Most organizations include actual costs from the past year to set future budget projections. There would be several benefits if the Municipality included costs from the past year; It would make budget projections easier and more accurate, it would avoid big surprises such as the increase in utility costs for the recreation center and it would contribute to increased transparency. Currently, there is no detailed accounting to taxpayers on where the tax dollars go. The annual audited financial reports only summarize spending without providing the details.

We support the Municipality’s donations as this money is provided to organizations that provide a direct service to the citizens and these organizations tend to have frugal budgets compared to the Municipality. There is a relatively good return on investment from these organizations.

In the name of continual improvement, here’s the challenge for future budgets; provide more opportunity for public input, improve transparency by allowing Council members access to the CAO and by using the previous year's actual costs when doing budget projections, and finally, keep tax levy increases at or below the rate of inflation.

Sioux Lookout Tax Coalition

Submitted by Alan Brailsford