Inflation, increased development, supply chain issues and a changing community will be some of the considerations that will shape the 2023 Town budget, says Val Sequeira, Director of Corporate Services and Chief Financial Officer.
Sequeira gave an early preview to Gravenhurst council of the anticipated challenges and drivers of the 2023 budget. He started by acknowledging that “this is a unique situation because this is the last year of this council’s term. But as the council knows a lot of the work we do continues on, it continues year to year.”
Sequeria first addressed ongoing issues in the community, with housing affordability being top of the list. “This is something we see come up over and over, as well as availability. The development activity we are seeing is going to tackle some of that, but it is going to take a year, two years or longer to see the proof of some of this,” explained Sequeira.
The Town, organizations and businesses will also continue to see supply chain challenges. Sequeira said that as we come out of covid and we should expect this to persist through 2022. He gave an example that a vehicle the Town orders could take a year longer than expected. However, he noted that they were fortunate that the new aerial truck recently added to the fire department’s fleet was unaffected by this and is already in use.
One new trend is that tax arrears continue to fall. “More and more people are paying their taxes on time. We have fewer and fewer people in arrears,” Sequeira said. He noted that while this is a positive, it does mean a decline in revenue from penalty fees.
This trend is a reflection of an overall changing community. Sequeira said that as the community changes, “we are seeing increased pressure. More and more people are saying ‘why do I not have this service? Why can’t I get this now?’ We are seeing our community changing and evolving. As people buy property and re-locate here, they have sort of different ideas of what services they should receive and what services they are expecting, certainly on some of the higher-priced properties in town, for the taxes they pay, what they do and don’t get.”
“So there’s increased pressure, the kind we have not seen in the past. In the last two to three years, people are asking for roads to be maintained, people asking for different things that really we were not in a position to afford previously and probably aren’t at this time,” he said.
A positive change is a significant increase in volunteer activity, Sequeira said, that is “filling chronic gaps in the community, things like food insecurity, youth supports and other social services. This is a good thing, the community recognizes the government can’t do everything and steps up, this can only be good for Gravenhurst.”
In terms of property value, Sequeira said that the Municipal Property Assessment Corporation (MPAC) has deferred the next reassessment to 2023 because of the pandemic. MPAC typically conducts assessments every four years, which can increase or decrease the value of a property.
And of course, Sequeria said that “we have been talking about inflation ad nauseum, we see it at the gas stations, we see it everywhere. Council has often talked about inflation but it is up 7% as of April 2022 on a 12-month basis. Residential and non-residential construction costs are up by double digits, 22.6% and 12.8% for the first quarter of 2022. The Town expects capital costs to be higher. He gave examples of asphalt prices being up almost 70% and iron and steel scrap increased by 37%. Sequeira emphasized that inflationary pressures for all contracted services will range from 5% to 20%.
A preview of the budget will be presented in August and an opportunity for public engagement and feedback will be offered. Staff intend to have the 2023 budget ready for distribution to the new council in January.
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