Good Evening Mayor Luciani, City Councillors, and members of city staff. My name is Walter Sendzik, CEO of the Greater Niagara Chamber of Commerce, and joining me tonight is the Chamber’s policy team (Kithio Mwanzia, Director of Policy & Government Relations and Graham Lowe, Policy Analyst) – as well, we have the Chair of the Thorold Business Council – Kylie Boyd, a Senior Manager at EXP consulting located in downtown Thorold.
The Greater Niagara Chamber is a member driven organization with over 1,500 members, representing 36,000 employees. We are the largest business organization in Niagara and the third largest Chamber in Ontario.
Tonight’s presentation has been informed by members of the Thorold business community, the Thorold Business Council and the Chamber’s Finance and Taxation Committee.
The Chamber’s approach to government budgets is that although government is not a private sector business, many principles of business financing can, and should, be incorporated into the operation of government when attempting to facilitate economic growth, manage the City’s finances and create value for the taxpayers.
No business exists without expenditures on capital, without operating costs and without re-investment. Being successful in business means spending and investing resources wisely. It means taking calculated risks and earning a return on investment. This is a principle of business that, when incorporated into government, can produce successful results that benefit the entire community.
With respect to this year’s budget, Thorold City Council has worked through the budget process to ensure that the impact remained at approximately the rate of inflation. This comes after taxpayers in Thorold have experienced a cumulative increase in taxes of approximately 24 per cent over the past three years. And this doesn’t include the regional tax portion of tax bills.
During this same period – the rate of inflation has increased by only four per cent and the average wage of most people in Niagara (outside of the public sector) has barely changed.
Looking at an aggregate sampling of Thorold businesses, the impact in some cases has been as high as a $40,000 increase in property taxes over the past three years. The median average of a 24 per cent tax increase for an industrial or commercial property owner is between $10,000-$15,000 in new taxes.
Combined with other increases like hydro and water/waste water, businesses such as Georgia Pacific are closing plants while others are struggling to increase pay for employees or expand their market share.
While Thorold cannot control all the increased costs of business, it can play a role in creating a competitive environment to retain and attract businesses based on sound fiscal policies.
Council and Staff have taken positive steps forward to mitigate future impacts on the city’s finances. For example:
- Initiating reviews of both fire and tourism services.
- Setting aside funds from the Hydro Reserve Interest for capital renewal and establishing the Asset Renewal Fund. In addition to deciding this year to develop a policy framework to ensure that spending decisions on both the principle and interest from this fund are made in a strategic manner.
- Being one of the first municipalities in Niagara to demonstrate multi-year budget pressures.
These are important policy developments that provide the framework for better fiscal planning.
But additional action is required to address Thorold’s increasing budget pressures.
From a review this year’s city budget planning, Thorold is facing:
- A Capital Affordability Gap of $47 million;
- Escalating capital and operational costs related to the new senior’s centre;
- On-going user fee revenue decline;
- And a climbing cost of deferred maintenance.
As a means to mitigate future significant tax increases, the Chamber recommends the following for consideration:
- The reliance on grants from upper levels of government exposes the city to a significant level of risk. This has been demonstrated by changes to provincial Payment-in-Lieu grants and Ontario Municipal Partnership Funding (OMPF). With the average real assessment growth in Thorold at approximately 1 per cent, the ability to fund the city will have to be guided by new policy mechanisms. Therefore, we recommend establishing a long-term fiscal plan for Thorold that includes an asset management plan.With the escalating cost of deferred maintenance further precipitated by this year’s long list of deferrals, the city will have to map out a concrete plan for service and asset sustainability moving forward.
- As Thorold is in a position to grow over the next 20 years, it will have to make policy decisions related to old assets and shift service concentration based on areas of growth. We therefore recommend the establishment of an asset disposal strategy that focuses on leveraging private sector investment and generating tax revenue from dormant, unused public assets.
- The City of Thorold must continue to address its fiscal and service sustainability challenges through additional shared services and implementing alternative service delivery strategies.Thorold continues to demonstrate its capacity to be a leader in shared services by the successful delivery of public transit services, and its comprehensive study of fire services with a focus on the shared services model. In addition, we are encouraged to see the implementation of alternative service delivery models through the contracting out of tourism services.As the need to share services with neighbouring municipalities increases, we recommend that that Thorold establish a Joint Service Initiative Committee to determine which neighbouring municipalities would be best to engage in shared service initiatives and to which service areas this method could be best applied.
Entrenching this process would yet again demonstrate leadership by Thorold in the area of shared service administration. This initiative should be coupled with a full service review of all operations to determine which areas would be best suited for shared service agreements with neighbouring municipalities. Thorold’s advantageous geographic position means that there are a number of neighbouring municipalities with which to engage in shared services agreements.
In closing, we recognize that you have difficult decisions to make as a city council. With the idling of Georgia Pacific – joining the long list of businesses that once called Thorold home – we all have to work harder to keep businesses in our community.