When Orangeville Council begins its 2010 municipal budget preparations on Monday, it will be contending with three major factors: building up depleted town reserves, contending with the town’s debt load and keeping tax increases within reasonable limits.

The reserves took a hit in 2009 when the town took advantage of substantial federal and provincial infrastructure grants to undertake necessary, but expensive, capital projects which are usually financed in equal portions by the federal, provincial and municipal governments.

In previous years, council has routinely cut the principal of its debt down by about $1 million a year while, at the same time, lowering the town’s portion of property tax increases.

The town-only increases on an “average” home, assessed at $247,000, were 6.8 per cent in 2007, 4.9 in 2008

and 2.8 in 2009. Currently, the municipal debt stands at $19.5 million, down from $21.4 million in 2007, the first full year of the current council’s mandate. Unit 519.942.1476 On a percentage basis, the $21.4 million in 2007 represented 0.92 per cent of the town’s total assessment of $2.319 billion, while the current debt load of $19.5 million is just 0.77 per cent of assessment now totalling a little over $2.5 billion.

(If the current debt retirement process is maintained, the debt will be down to $18.33 million by the end of this year, or .067 per cent of assessment totalling $2.7 billion, and to just $14.8 million in 2013.)

During the recent meetings of the ad hoc committee on council remuneration, council critic Don Kidd maintained that council didn’t deserve the committee’s recommended raises for the new council elected next October and said it was “not doing a good job.”

To prove his point, Mr. Kidd stated that, during the current council term, the debt had risen by $3 million. While he was correct, the increase was in 2007 and was caused by the previous council’s capital

spending.

Meanwhile, it appears that simultaneously replenishing reserves and paying down the debt would be impossible without a large tax increase.

Thus, speculation around Town Hall is that building up reserves will likely be less of a priority in the 2010 budget

preparation than debt reduction and keeping tax hikes as low as possible. “We need to be cognizant of the environment we are living in,” Mayor Rob Adams said in an interview. “Things are looking better but people are still unemployed. We have to make it as least difficult as possible.” As in past budget deliberations, the mayor is likely to have a polar opposite in Councillor Scott Wilson, who has contended that reserves, which he terms “pitifully low,” are of prime importance. He has said that the town should set a target to achieve, over a specified number of years, reserves that are equal to the municipal tax levy. In other words, if the town is taking in $20 million in tax revenue, it should have $20 million in reserves. Replenished reserves can also help in debt reduction, because they can be used to fund projects that may otherwise DAN require borrowing money. For example, due to low reserves, the town may have to borrow to pay for the lands it recently purchased from the Upper Grand District School Board. There is also the question of the formula for paying down the debt and whether it can be maintained. Total annual payments on the debt (principal plus interest) currently come to $2,030,400 per year. Of that amount, between $450,000

and $650,000 comes from the tax levy. Between $1.38 million and $1.58 million comes from development charges and water/wastewater revenues.

Thanks to low mortgage interest rates, the real estate market has been relatively healthy in Orangeville, producing revenue from development charges to contribute to debt reduction and add to the obligatory reserves.

Should construction slow, however, and development charge revenues diminish, council will be faced with choosing between tax increases and service cuts.

“We need to be fiscally prudent on the services we provide,” says Mayor Adams.

One service opposed by the mayor but supported by the majority on council, is snow removal from all sidewalks in Orangeville, which in a typical winter costs about $260,000.

Sidewalk clearing could, though, be as much a legal responsibility as a civic one. Legal precedents show municipalities are often held liable when accidents occur on their sidewalks during the winter.

Mayor Adams is more or less unfazed by this. “That is what insurance is for,” he said, pointing out that insurance premiums, while almost always on the rise, still turn out to be less costly than providing the snow clearing service.