2018-2022 Financial Plan

APPENDIX C: INFRASTRUCTURE FUNDING STRATEGY

In 1998 the contribution from general revenue for equipment replacement was $252,300. The number was determined when we had two fire halls and a different pay structure for firefighters. In 1999, it received a 5% increase and has remained since that time at $264,900. In 2003, a lump sum of $178,000 was added, relating to fire response to the Kelowna forest fire situation. Since 2000 the District has acquired additional vehicles worth about $350,000 and between 2008 and 2009 will spend another $1.5 million on vehicles for Fire Hall 4. In addition, replacement of other apparatus such as hoses is funded from this reserve. Progress to Date Beginning in 2008, Council directed 1% of the 4% approved tax increase specifically for infrastructure sustainability. This amount is estimated to be $415,000 for 2008. The following year it is estimated to generate an additional $442,000 for a total of $857,000; 2010 is $1.3 million and 2011 is $1.8 million. This issue is significant, as evidenced by the shortfall illustrated in the graph below 2 3 . We have time to get ahead of the curve, but time is of the essence. The sustainability funds directed by Council toward this issue will certainly begin to address the funding shortfall and the practice is in alignment with the District’s Financial Sustainability Policy (FSP) 7.0 (the FSP’s referenced are listed in Appendix 5). In addition, plans for maintenance programs and construction projects continually look for ways to extend lifecycles and minimize maintenance spending. Another way in which Council could have a significant impact on this issue is to ensure future growth in taxation revenue is directed to sustaining current assets and services for the growing population. Dedicating a portion of annual tax revenue derived from growth in the tax base towards sustaining new growth in our asset base is a sound approach in support of FSP 7.1.

Unfunded Infrastructure Liability

$70,000,000

Unfunded Infrastructure Liability

Additional Renewal Funds - 1% of Taxation

$60,000,000

Annual Renewal Spending

$50,000,000

$40,000,000

$30,000,000

Annual Amount

$20,000,000

$10,000,000

$0

2006

2011

2016

2021

2026

2031

The District of Maple Ridge is certainly not alone. The Federation of Canadian Municipalities (FCM) estimates the municipal infrastructure deficit to be $60 billion and growing at $2 billion a year. The magnitude and scope of the shortfall may discourage communities from taking action on the notion the problem is too large to be resolved by municipal means alone. While most communities will likely need assistance of some kind, FCM strongly encourages local governments to take action and demonstrate their ability to address the issue. They have provided a series of recommendations, a critical one being that “municipal governments must evaluate how they plan for growth, price their services and generate revenues. A long-term plan, with targets and milestones, must be put in place to help phase in these changes over the next 20 years.” 4 The FCM document also suggests that current municipal accounting practices do not tell the whole story. Municipal governments may appear fiscally healthy, but only because they have underinvested in services and infrastructure essential to their economic health. This is one key reason the Public Sector Accounting Board (PSAB) is changing the financial reporting standards as of January 1, 2008 and Maple Ridge’s infrastructure shortfall will become a key item on the financial statements. Having a program in place that addresses the situation prior to the financial reporting change will demonstrate fiscal responsibility.

2 Previous projections used an infrastructure inventory with a replacement cost estimated at $580 million. Significant work is underway to catalogue and value the District’s assets and to date the estimated replacement cost has been revised to $1.3 billion. 3 This graph represents our entire inventory of infrastructure, including assets not paid for out of general revenue, such as the water and sewer utilities. 4 “Building Prosperity from the Ground Up: Restoring Municipal Fiscal Balance”, Federation of Canadian Municipalities, June 2006.

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