/Mountains on matchsticks

Mountains on matchsticks

By Chad Ingram

Municipal treasurers, other staff members, councillors and, well, I’m just going to go ahead and say everybody, probably, must be relieved that another budget season has come to pass.

And while the budgeting process can be mind-numbing to observe, it is also a window into the increasing complexities and changing proverbial landscape facing municipal governments.

Traditionally, the County of Haliburton and its four lower-tier municipalities have had low taxes, low debt and low services. The latter is not a criticism of quality. What I mean is that in this community we don’t have garbage pickup, public transit and other services you would find in more urban areas.

But that long-time trend is beginning to change. In recent years, the county and some townships have begun taking on debt – taking out loans – to complete projects, most notably roads work. And this is fine. In fact, carrying some degree of debt can actually be helpful. For the past decade or so, it’s been common to see the county and its lower tiers passed over by the provincial government for grants. That’s because the county and its municipalities are all in pretty healthy financial shape. They have relatively low debt loads and relatively healthy reserve balances. It’s become a mantra for the provincial government – regardless of its partisan colour – that if a municipality’s books are good, then that municipality must not need any help.

So, if you carry some debt, your chances of getting approved for provincial grants actually improve.

One of the interesting things about municipal governments is that, unlike their federal and provincial overlords, they cannot run deficits. It’s illegal, prohibited by the Municipal Act.

So as pressures mount, particularly regarding aging infrastructure, borrowing is becoming more common. In 2019, the County of Haliburton borrowed $3 million to complete some road projects, including a reconstruction of part of County Road 1. The 2021 Minden Hills draft budget included some $7 million in borrowing for public works projects, although councillors carved away at that figure, including removing a $2.1 million loan for the reconstruction of Bobcaygeon Road. Two councillors in particular – Pam Sayne and Bob Carter – were adamant throughout the process that the township not become too heavily reliant on debentures, accruing loan repayments and interest that would come back to bite taxpayers down the proverbial road.

With retiring baby boomers, and now, the COVID-19 pandemic causing the county’s year-round population to grow, there will be greater demand for services and greater strain on existing infrastructure. However, because most of these “new” year-round residents have been long-time, tax-paying seasonal residents, it means the tax base will not increase at the same rate as these pressures. This will make borrowing more enticing for municipal governments moving forward.

While some level of debt can be helpful, municipalities must be careful not to go overboard on borrowing, not to build mountains on matchsticks.