Since our municipal election on October 15 is in danger of being overshadowed by all the federal electoral mayhem, let’s have a look at what promises to be one of the key municipal election issues: the City of Whitehorse’s finances.
The city recently released its 2014 financials, and a comparison of the key elements going back to 2012 allows a view of the trends.
Overall, the city is in robust financial health. City council raised taxes in each year of its three-year term, so the tax revenue line has gone up despite the shrinking Yukon economy in 2013 and 2014 (we haven’t seen the final figures for 2015, but this year isn’t looking good either).
The marvellous thing about property taxes, from the city’s point of view, is that - unlike income taxes - you have to pay the increases even if your own income or small business profits went down during the recession.
Total revenue in 2014 was $69 million, excluding the $52 million one-time accounting item for the “donation” of Whistle Bend from the Yukon government to the city.
Meanwhile, despite the grumbling one hears around town about new trucks and growing numbers of staff at city headquarters, expenses have been relatively flat. The bill for 2014 was $66 million, which was 3.3 percent higher than 2013 (more than inflation) but actually lower than 2012.
That left the city with an annual surplus for 2014 of $2 million. It also had surpluses in 2012 and 2013. In fact, the surplus in 2014 was bigger than the increase in tax revenues from 2013 to 2014. This means that the tax increase wasn’t actually needed in order to have a balanced budget for 2014.
So what is the city doing with this extra money? It is growing its reserves and paying down debt.
Long-term debt was $11 million in 2012 and was $2 million less at the end of 2014. Meanwhile, net financial assets grew from $16 million to $24 million over the same period.
The city could be building up this money to make the down payment on the big megaplex project of new city buildings it is planning. New debt or perhaps some government infrastructure funding would pay for the rest of the construction bill.
One can debate whether new office space for city employees is really the kind of productive “infrastructure” that improves long-term social well-being and economic productivity, but it seems to qualify under the relevant federal programs.
It’s also worth pointing out that the city financials only became available recently, nine months after the 2014 year ended. If you run a company or a non-profit, you have 90 days or less to give your financials to key stakeholders. Try telling the Canada Revenue Agency that your financial statements won’t be available until September.
The city should really get these to citizens much sooner, so we can use them when we think about all those tax-and-spend proposals that go to city council all year. Big companies, with much more complex legal and accounting structures than the city, manage to do it within six weeks. We should expect as much from public government.
The same applies for the annual report for 2014. As of last Monday, it was still not available on the city’s website.
When the municipal campaign gets going in earnest, I think two big issues will be on the table.
The first is the megaplex. Should it proceed as the massive construction project proposed by the current administration in late 2014? Or should it be skinnied down into a less grand repair and maintenance centre, with the city’s office space needs met by a combination of vacant downtown office space (of which there seems to be a growing amount) and a smaller new build?
Given the outlook for the mining and energy sector, is now a good time for our city government to borrow large sums that will involve decades of debt repayments?
The second issue is tax and fee increases. Should city tax revenues grow faster than inflation? Faster than our economy? If so, for how long? Sewer and water fees have grown substantially faster than inflation over the last 25 years. Is our plan to continue this into the future? If not, what is it about the way the city does business that will have to change?
These two issues are closely linked, since a smaller megaplex project may require a smaller city surplus to be plowed into it.
The deadline for candidates to submit their papers was yesterday. I suggest they immediately download the 2014 financials and get out their calculators, since the debate is sure to focus on them.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist. You can follow him on Channel 9’s “Yukonomist” show.