OLIVER PAIPOONGE — After reviewing a first draft of the 2024 Oliver Paipoonge budget that includes a 41 per cent tax levy hike, municipal leaders are offering reassurances that number will be brought down significantly before the budget is approved.
Mayor Lucy Kloosterhuis said that eye-popping starting point, presented to council by staff last week, stems from the township’s newly developed asset management plan.
“The reaction of the whole of council was, ‘Whoa,’” Kloosterhuis said. “Our asset management plan has shown us a budget of, at that point, about 40 per cent increase in our tax rate.”
Kloosterhuis called that figure a reflection of the long-term infrastructure challenges facing many Ontario municipalities, but not a sign of what tax payers will end up seeing on their bills next year.
“I can tell the residents right now there will not be a 40 per cent increase in their tax levy,” she said.
The township followed the same budget process in 2023 after the asset management plan was completed, Kloosterhuis said.
“Last year, we started with 97 per cent, and we got it down to five [per cent]. Administration will bring it down for us.”
She said council is targeting an increase in the neighbourhood of just four per cent. CAO Wayne Hanchard expressed confidence that is possible, while requiring trade-offs.
In order to slash the proposed tax hike that drastically, the municipality will need to postpone or debt-finance millions of dollars’ worth of items in the asset management plan.
Asked how that can be done, Kloosterhuis suggested the township will try to stretch out repairs and replacements where possible.
“There's going to be equipment and buildings that are going to say in the asset management plan, ‘You should replace that truck because it's at 10 years.’ But perhaps that truck hasn't been used very much in the last two years, so we could get another year out of it. So we’ll reassess all of those items and see if we can extend it one more year, but without it breaking down, of course.”
The 41 per cent tax levy hike reflected in the draft budget represents the level of spending the asset management plan indicates is needed in 2024 to properly maintain infrastructure and plan for replacements.
While Kloosterhuis said council isn’t prepared to pass a double-digit tax hike to achieve that goal, she added it can’t be ignored either, and will require growing investment.
"We can't walk around with our head in the sand and pretend things aren't having to be replaced," she said. "We don't want a bridge to collapse, we don't want a building to all of a sudden have the roof cave in."
"We hope that gradually over time, we'll catch up, because over the years, we've run into an ‘asset management deficit,’ in that we haven't always replaced things when they should have been… and put it off for a year here or there, just to keep the tax dollars down."
The draft budget presented to Oliver Paipoonge’s council last week includes just a 5.75 per cent increase to its operating budget, but a whopping 133 per cent increase under capital spending driven by asset management plan items.
Hanchard called the $3.9 million in capital expenditures planned for “Fire and Emergency” in 2024 the “big number on the page.”
Kloosterhuis said some capital items are non-negotiable, like a $1.1-million expense to purchase two new fire pumper trucks. She indicated $700,000 of that was set aside in prior years, though the budget document reflects a full $1.1-million cost in 2024.
Kloosterhuis said the municipality has a head start on many others that are still working to complete the provincially-mandated asset management plans.
She expects other municipalities to face similar numbers in the coming years as they complete their own plans.
The City of Thunder Bay, for example, is working toward a 2025 deadline to complete a funding strategy for its plan. Staff have estimated the city would need to spend at least $30 million more per year to properly maintain infrastructure and plan for replacements.
Oliver Paipoonge is hoping growth in the township’s tax base will help defray rising taxes, saying it’s likely to come in at over 1.5 per cent after MPAC numbers are shared later this month.
The community saw $20 million in construction value this year, up from $10 million last year, Kloosterhuis said.
The municipality is expecting to receive 2023 numbers from MPAC before the next budget meeting on Dec. 14.
Residents can find more information about that meeting, budget documents, and other information at the municipality’s website.
