Spending and Taxes

Sudbury finds itself in a difficult situation.  It needs to invest in itself in order to progress but its economy and population are not growing.  

Population projections by the Ministry of Finance and Conference Board forecast negligible growth (approx. 1-2%) to 2041. At the low end, 1% will increase our population from 161,500 to 163,000 over the next 15 years, or 107 people per year.  A 2% increase brings the population up to 164,700 with 215 addition people per year to 2014. Respectively, this translates into about 47 to 94 new households per year. In my experience as a market and housing analyst, I would call this a stagnant not a growth scenario.   

Over this same period, the Ministry of Finance has forecasted a decline in the number of children and a ballooning share of seniors to 35% of the population.  The aging of our city within a stagnant growth scenario is a reality that will affect us deeply.

Aging households are not big spenders…they don’t drive the economy.

Economies grow when economic growth attracts new people who purchase houses and services and stuff for their children.  This, unfortunately, is not our future, as currently projected.

Compounding the severity of this possible outcome is the municipality’s rate of spending.  Over the past four years, municipal spending has outpaced the rate of inflation. To keep it simple, let’s round inflation at 6%; the municipal budget increased by about 12% and property taxes increased by 12.5%. Spending is double the rate of inflation.

Municipalities, including Sudbury, are reliant on transfer payments and grants from the provincial and federal governments to boost their budgets in order to provide services.  This lending/borrowing relationship is guided by the following principles:

  1. Stewardship: Public resources produce best value where expected outcomes are clearly defined, and programs and organizations are focused on enabling and achieving those outcomes.

  2. Reciprocal respect: A transfer payment is the result of a partnership based on reciprocal respect.

  3. Accountability: Parties to a transfer payment agreement must be accountable for addressing expected outcomes. Good administration supports accountability by providing transparency and capacity to deliver. (Province of Ontario)

Although we are still receiving transfer payments and grants, the amounts have been declining.

Our infrastructure is aging and in need of upgrading. Water, wastewater, fleet, public transit, roads, sidewalks… all are necessary and will come at a big price tag.  The large projects will require the Municipality to borrow and pay interest on the loans. There is still anger over amalgamation. Operating budgets have been growing.  

The result of declining transfer payments and grants coupled with spending that outstrips the rate of inflation is increased property taxes and a higher cost of doing business.  The belief that future spending will not affect our taxes is, unfortunately, wishful thinking. The money always has to come from somewhere.

Council’s role is to set vision and policy, and represent respective wards and the Municipality as a whole.  It is elected to invest and grow strategically, keep the house in order, and ensure we live within our means.

The manner in which we are spending, and plan to spend, is unsustainable.  Due diligence is needed. More and more people have expressed this concern and are questioning where the current path will lead us and what it means for our future.

Sudbury has to find its own growth strategy and it strategically invest in itself before it can begin marketing the region as a place to invest and a place to live.

Questioning decisions that have been made and how budgets are spent is not being anti-development… is a right in a democratic system and the responsibility of all who represent you.

Lincoln made famous the statement that “a house divided against itself cannot stand.”  You should expect a Council that stands in unison to protect what we have and grow it strategically.

Elizabeth de Luisa is running for in Ward 11 in Greater Sudbury, ON.