Like many of you, I hope, I paid my municipal taxes this week - one day early, in fact. And when we retrieved our tax notice from our files, it was still in its envelope, and we still had the full-colour (which is more expensive than black and white) information sheet. Not only does it include good information on where our money is being spent, it also included some questionable propaganda, including the statement that the budget is a success.
I found the use of the word success to be a bit odd in relation to a budget that is still in its early days of implementation. Yes, council has approved a budget, most of which we weren't allowed to see in any detail - perhaps in the eyes of some, keeping council in the dark on how we plan to spend citizens' money is a success. But really, a budget is just a spending plan, in which we try to forecast how much we need to spend on various projects, as well as on regular maintenance work, salaries, and the other usual things that a city has to spend money on. In my mind, the budget can only be judged a success at the end of the year - were our projections on target? Did we manage to save money here and there? Were we able to avoid borrowing money?
I've used the analogy before of your household budget. You set out how much money you have each month, figure out what you have to spend on the various parts of your life, put aside money for emergencies and for major purchases, and that's your budget. If you're sensible, your various spending and saving targets fall within your monthly income. If they don't, you start trimming on the non-essentials, perhaps putting off major purchases for another year, or scaling down on your vacation plans. And then (and this is the hard part) you spend according to the plan that your budget has laid out. That's if you're sensible. If you're not, you make a slapdash attempt at budgeting, miss a few vital expenditures (oops, you forgot to include vet bills for the cat), and have a hard time resisting impulse spending. And your solution when you come up short is to dip into overdraft, the line of credit, or apply for another credit card.
So when the city prepares its budget, one would hope that we start with the basics, identify necessary projects, set aside something for emergencies, and then look to finding efficiencies, because nobody likes to go to the public for more tax dollars without being able to show that your current taxes are giving you good value for your money. One would hope that it would happen that way, but we haven't been preparing budgets following a process like that for the last few years, and this year, the assumption before we started (an assumption that wasn't approved by council, by the way), was that we would spend the way we did last year, plus more.
And that, apparently in the minds of some, is successful budgeting. It gets even more ironic when you consider that, at the last council meeting, we approved adding $20,000 to the budget for additional transit hours, with no plan as to where that money is to come from. One councillor did try to suggest that we take the money from the bridge maintenance budget, claiming that the report for that project that we had been given some time ago was inaccurate, but since we lacked a new report which showed this, his motion wasn't supported.
And then yesterday Andrea asked me why the city was going to borrow $12 million to meet current operating expenditures. She had gone to the city website to check out a press release on why the green ash in the city have large expanses of leafless branches, to see if the city's reason and prognosis for the trees matched hers (as a forester, she notices these things). Anyway, while on the website she wandered about, greatly amused by the press release announcing "Proud to be PA Day", which was apparently last Sunday (oh, did you miss it too? Just another sound bite creation out of city hall that council had nothing to do with), when her eye was caught by public notice of a borrowing bylaw that will be brought forward at the next council meeting on July 12.
The city does borrow money in the short term. Like all borrowed money, it needs to be paid back. And it is usually for individual projects, not for ongoing operating expenditures. That's like putting your groceries on your credit card because you don't have enough money in the bank to pay cash or by debit card. It will get you groceries, but at some point, you'll have to pay the money back, and interest charges will be involved.
I realize that, at this point in the year, not everybody will have paid their taxes. I realize that we need to do some borrowing to ensure that the cheques don't bounce. This $12 million is within the amount of money that we are allowed to borrow, based on the restrictions set out in The Cities Act. That total amount is based on our overall tax revenue, and currently is about $40 million, although we have $20 million in outstanding long term loans. So at least we're not going to completely max out the credit card.
But even though I realize that we are following proper procedures for doing this borrowing, I will be asking how this amount compares to amounts borrowed in years past, what the borrowing costs will be, and how long the projection is for repayment. I will also ask what the alternatives are to short term borrowing, to see if perhaps next year, we can avoid these extra costs.
But wouldn't it be great if our finances were in such good shape that we didn't have to borrow almost one quarter of our budget, and instead had spending reserves of our own that we could borrow from, and then replenish, as taxes come in. Oh, yeah, I forgot, we spent those already.
"Let us all be happy and live within our means, even if we have to borrow the money to do it with." - Charles Farrar Browne