By Cecilia Nasmith
Northumberland County's annual budgeting process includes setting a target levy increase to guide the various departments as they plan next year's budget.
At council's Finance and Audit standing committee meeting for June, members came up with a number they acknowledge may not be palatable – and even so, they're not necessarily sure that it is really as high as it should be.
Councillor Brian Ostrander came up with the recommendation of a 5% target, as well as a doubling of the 1% dedicated-infrastructure levy to 2%.
The meeting included other recommendations for the challenges unique to this point in time, such as supply-chain issues and the very speed of inflation. For example, Purchasing Manager Carl Bonitto set out recommendations for updating the purchasing bylaw that streamline approvals. This is a crucial consideration at a time when any delay in awarding a contract or making a purchase could well mean a rise in price beyond what is budgeted.
But a lengthy report from Treasure Glenn Dees put specific numbers on what has been happening leading up to the planning process for the 2023 budget.
The Consumer Price Index has risen 6.8% and the Nonresidential Construction Price Index has gone up 17.3%.
Meanwhile, the after-growth increase in the county's tax levy was 1.6% in 2021 and 2.7% in 2022.
“Because of this, what we are really experiencing and what's happening is, we are quickly getting behind the eight ball, as our base levy going into 2023 has been eroded, based on the inflation we are currently seeing,” Dees stated.
While the need to gain ground is clear, he said, they must also recognize how much of an increase the average home owner can bear.
He spoke of the need for consistent moderate levy increases over the long term.
“We are coming to a bit of a crossroads now, I think, entering into the 2023 budget cycle based on what our levy increases have been and what we are seeing from an inflationary perspective,” Dees said.
Referring to such long-term projects as the Campbellford Bridge, he added, the county is looking at the challenge of securing financing and debt servicing at a time when the Bank of Canada is rising interest rates.
His recommendation would have been a 7.2% increase, though there is no way of knowing what the reaction might be.
Dees had mentioned the county's budget survey that had been available for four weeks, a critical component in establishing the target levy increase. The 130 (to date) respondents were asked how big a levy increase they could support. And while half of them gave an answer in the 4%-to-5% range, 5% was the highest option offered.
And, he added, 14% of respondents wanted no increase (some even wanted a decrease).
“We all know what we are going through in this great wide world of ours, but the numbers are still shocking when you see them and you have to make decisions on them,” Ostrander said.
Given the circumstances, he added, “it would be wise of us to make a recommendation for a number that is probably not palatable to a lot of people, but my recommendation is 5%.”
Ostrander's rationale is that this was the highest number on the survey - “but still not enough at the end of the day. But we need to find a balance here.”
He added his recommendation on doubling the dedicated infrastructure levy to 2%, with similar sentiments.
“We know 1% doesn't get us anywhere – we are going backwards. Two per cent doesn't get us much further ahead, but we need to consider what happens to our infrastructure if we don't fund it in a progressive manner.”
Warden Bob Crate agreed with those numbers.
“Although I find 5% is going to be tough on people, we just can't keep going backwards,” Crate said.
“Five per cent is a painful number, but I think we have to be realistic,” Ostrander added.
“At 5%, we are still behind the eight ball.”
