Water Budget and Infrastructure

Water Budget and Infrastructure

On Wednesday, January 28th, city council passed the 2015 water and wastewater rates at the non-tax supported budget meeting. More details on the budget can be found on the city website (or watch the video on Rogers TV), with the new 2015 rates (effective March 1) presented below: a 4.1% or $31 average annual increase.

Water Budget and Infrastructure

What’s All The Fuss About Infrastructure?

During the 2014 election, I did some extensive research on the annual infrastructure deficit that is plaguing the city (and, in fact, most cities in Canada). Such city deficits in Ontario are a complex matter with a frustrating history and addressing this important issue is one of my goals. I won’t go into great detail here but rather put forth this simple analogy:

45 years ago the City of Guelph installed a system of sewer pipelines that cost (in today’s dollars) $100M. The sewer system has a projected lifetime of 50 years and then will need to be replaced at another cost of $100M. Thus it stands to reason that each year the city would put $2M away in a bank account - an infrastructure reserve fund - so that in 50 years when the pipes need to be replaced there would be $100M in cash waiting to be spent. Not wanting to overburden its citizens and hoping to keep tax rates low, city council has only been contributing $1M of tax revenue into the reserve fund for the past 45 years. There is now $45M in the reserve fund but in 5 years we may have a $100M bill to pay or the quality of our infrastructure systems will be in jeopardy.

As you can see from the above fictitious (yet analogous) example, the city hasn’t been collecting enough money from residents to maintain our infrastructure, which includes our water and wastewater systems. Naturally, residents don’t want a huge fee increase to pay for the repairs but in reality residents have been severely underpaying for many years because the councils of the day didn’t charge the full amounts needed. Councils kept pushing the issue further along the years, providing lower fee increases to their residents at the expense of the pocketbooks of residents of the future. This does not reflect fiscally responsible governance.

Guelph’s Infrastructure Deficit Overview

The City of Guelph commissioned a Sustainable Infrastructure Report in 2012 that highlights the city’s severe infrastructure problems. The report identified that as of 2012 the city has a $25.4M annual infrastructure deficit - money that the city needs to collect that it isn’t. Additionally, due to these financial delays, there is a $136.6M backlog of infrastructure work that is overdue and need to be completed.

Eliminating The Water and Wastewater Deficit

Back to the 2015 water and wastewater budget. Staff identified in their report to council that in 2015 water had an infrastructure gap of less than $1M while wastewater had a gap of about $6M. I believe it would be both irresponsible and disrespectful of council if we failed to address these infrastructure deficits promptly and allowed them to continue under our watch.

To avoid shocking the 2015 budget with one massive fee increase, I asked staff to present a scenario that would eliminate the less than $1M water infrastructure deficit this year and the ~$6M wastewater deficit over four years. By the end of the current council’s term in 2018, we would have completely eliminated the continued infrastructure deficits in these two service areas by creating an ongoing sustainable budget.

The results of my request are below. The per cubic metre water rate would need to increase from the unsustainable rate of $1.52 to $1.61 and the wastewater rate from $1.66 to $1.79. The total average annual 2015 residential bill would change from a 4.1% or $31 increase to 8.5% or $65 increase.

Water Budget and Infrastructure

For an extra $34 a year per household, council could have completely eliminated the water and wastewater annual infrastructure deficit.

This change reflects the fiscally responsible government that I believe residents both expect and deserve. All it would take is the political will to make it happen.

Sadly, the majority of council did not agree with my proposal to modify the 2015 rates to a sustainable level. My motion failed 9-3, with only Councillors Salsbury and Van Hellemond joining me to vote in favour. This news perhaps pleases Guelph’s fiscally conservative residents who are primarily concerned with keeping taxes and fees as low as possible but it does not adequately serve the city’s residents of today nor tomorrow.

With my motion defeated, the proposed 2015 non-tax supported budget still needed to be approved. I am committed to the idea that once council has debated and voted on an issue, council speaks with one voice. Consequently, I voted to approved the proposed unsustainable budget and the 4.1% increase to water/wastewater rates as noted above.

Infrastructure and the Future

The issue of closing the infrastructure gaps is far from over, though. After the budget was passed, Councillor Downer proposed a motion (which passed unanimously) that asked staff to present to council during the 2016 non-tax supported budget deliberations options to close the infrastructure gap promptly. Consequently, it’s still possible that the gap will be eliminated before this term ends in 2018 if it is the will of council.

While my motion didn’t pass, perhaps it set up some positive action for the future. If that happens, it’s the residents of Guelph who wins.