In accepting the capital budget as presented last Monday, Yorkton Council made an interesting decision on respects to paying the costs of water retention ponds being constructed in the city.
Council, after much discussion, opted for a payment plan of five years, a decision which is basically a pay-as-you-go option.
While paying for the ponds being built adjacent to Dracup Avenue and where Brodie Avenue used to be, as they are being built, makes a lot of sense, it will also create a major drag on the budgeting process for the next five years.
The waste water retention program has already been tagged as the reason property taxes in Yorkton will rise 2.5 per cent in 2012, and a similar hike is being called for in 2013.
Reasonably any tax increase for any other reason would not be possible until at least 2014.
When you look at the growth taking place in the city, the potential to need additional capital is very real.
Mayor James Wilson spoke at the Chamber of Commerce luncheon last week and pointed to the immediate need to bring additional city-owned land within city boundaries in order to facilitate commercial and residential lot development to allow for continued growth. While the lot development will come from the City's land fund, and not its annual capital budget, there will be additional costs, ranging from snow removal to the potential for the need of more police as the city expands.
We recently saw the City unveil a $225,000 snowplow truck needed as the city has undertook highway feeder maintenance.
The decision to pay the pond costs over only five-years will also gobble up some $400,000 annually from the City's capital budget.
The loss of those dollars will have an impact on what gets done moving forward.
Councillor Les Arnelien noted at the Nov. 28, meeting that the City is still spending significantly more on capital today; $2.2 million in the 2012 budget compared to $1.2 million in 2006.
That actually sounds more significant than it is.
The $1 million dollar increase does not detail the impact of a half decade of inflation. A dollar does not go as far today.
Cutting into the extra dollar also runs counter to the reason the capital budget has grown. Council has been constantly reminded by its Administration about the extreme capital deficit in the city. As an example, sidewalk renewal was once tagged at about 150-years, and past Councils began to put more money into renewal in an attempt to short the timeframe. Sidewalks were down to 75-years, but pulling $400,000 annually out of the capital budget could impact the progress made.
We already saw some slippage based on the vibrant Saskatchewan economy pushing up costs. This year the City received only one tender bid on its 2011 sidewalk program, coming in at $109,565, above the budget for the concrete program of $65,000. The higher tender reduced the scope of 2011 work to Livingstone Street and Second Street and deferred the work on Argyle Street to 2012.
When you factor inflation, rising costs based on economic strength, and the unknown costs which could come with growth over a half decade, and the quick paydown of waste water pond construction may prove short-sighted moving forward.
