Stagnant economic growth and the lowest development levels in years will make it difficult for the city to maintain services next year, said Brantford's chief administrative officer Ted Salisbury.
“Our assessment levels are at record lows,” said Salisbury, who briefed councillors about the city's financial situation this week.
Brantford's 2012 operating budget is $119.2 million. To maintain existing city services and cover increasing delivery costs, the 2013 budget would have to increase by $5.6 million to $124.8 million.
But the city's budget target is a $3.2 million increase. Meeting that target means some services will be cut or curtailed.
“The cost of running a municipality continues to increase,” Salisbury said, noting that proposed gross expenditures for 2013 are projected to be a “formidable” $279 million.
About 37 cents of every municipal tax dollar – totalling $46.36 million – is locked into emergency services including police, fire and ambulance, with little room for cuts, Salisbury said. Roughly 38 per cent of gross expenditures go toward salaries and benefits.
Dwindling assessment growth and mounting debt will continue to erode budget surpluses, which during the last decade peaked at almost $9.5 million in 2007, but shrank to $617,659 last year.
In 2012, growth fell to its lowest level in 10 years and local unemployment ran a full percentage point higher than the national average of 7.4 per cent. As a result, the city is currently running a $650,000 deficit that by law must be eliminated before the end of the fiscal year.
Aside from attracting “shovel-ready” development to the city, Salisbury said one solution to this financial pressure is to alter or eliminate non-core services, as determined by council and the recent service review and taxpayers' bill of rights survey.
“In light of the budget target for 2014 (which calls for a 1.5 per cent increase), I think it would be very difficult to achieve that target without taking a hard look at all the services provided,” Salisbury said.
Additional challenges facing the city include the growing infrastructure gap and a debt load that is projected to top $80 million in 2016 thanks to recently approved debenture financing for the Greenwich-Mohawk and Sydenham-Pearl brownfields.
Built-in costs for the 2013 budget total $4.3 million, including $820,000 for the Gretzky centre and $700,000 in rate increases for the city's urban fleet.
Reducing the reliance on gapping – the savings realized before departing city employees are replaced with new hires – to a more realistic $800,000, down from $1.4 million in 2012, means an additional $600,000 cut from the operating budget.
Further reducing risk by reallocating dividends from the Brantford Energy group of companies to the capital budget instead of counting on over $1 million in variable funding for the operating budget also narrows council's financial wiggle room.
Several city departments will present to the estimates committee during the coming week, with the budget-making process to begin next year. Treasurer Cathy Brubacher will update councillors on the 2012 deficit and 2013 outlook on Nov. 22.
For the first time, the city will host two budget open houses at the Brantford and District Civic Centre on Dec. 4.