In lead up to a
decision to approve a new municipal $33
million Indoor Turf Facility that will add $15 million to the City of Thunder
Bay’s debt and take the remainder from the reserves, comes the Treasurers
Report that will be presented at this evening’s Council Meeting. There is a lot there for the year ended
December 31st, 2019 but one of the things that stands out is the
City’s debt position which faces “challenges” that as the report notes include increasing costs of
programs and services, a debt to reserve ratio that is higher than the industry
average (i.e., other municipalities), reduced funding from senior levels of
government and low assessment growth among other things.
The two accompanying figures drawn from numbers taken from
the Treasurer’s Report highlight quite dramatically what this looks like. Thunder Bay’s per capita municipal debt (Figure
1) rose from $1,618 in 2015 to $1,839 in 2018 – an increase of 14 percent. Over the same period, its provincial municipal
counterparts on average went from $699 per capita to $758 – an increase of 8
percent. By 2018, the per capita
municipal debt in Thunder Bay was essentially more than twice that of the average in
Ontario. Of course, if one has reserves, then the potential impact of the
problem is mitigated. However, as Figure
2 shows, while the average in Ontario is essentially one dollar in reserves for
every dollar in outstanding debt, in Thunder Bay the ratio is nearly double at
1.7 (i.e., $1.70 in debt per dollar of reserves).
Compared to the average in Ontario, we are more indebted and
have a weaker reserve position. We are going
into the 2021 budget season with what is now a “trimmed”
$7 million dollar COVID-19 induced budgetary shortfall which also has to be
dealt with to which one of the proposed solutions among other things is a “special
one-time tax levy.” In this environment City
council is considering adding another $15 million dollars in borrowing which
will add upwards of $130 dollars per capita to Thunder Bay’s total outstanding
municipal debt.
At this evening’s meeting, if councilors are planning
another marathon 5 hour session to things like loitering bylaws and minor
zoning amendments, perhaps they might consider devoting a mere hour or so of their
time to understanding the financial implications of Thunder Bay’s mounting debt
given its historic inability to keep it within “industry averages”.