City council trims $500,000 from budget

GREG YOUNGER-LEWIS

Iqaluit city council scrounged for almost half a million dollars in cutbacks this week to avoid an illegal deficit, caused by falling revenues and a mounting list of expenses.

Every year, the city must balance its books, or its budget won’t be approved by the government of Nunavut.

But administration warned that council has to cut even deeper in order to revive their dying reserves – essentially the cash that they need to stick with their plans to upgrade facilities and pave the city’s roads.

Ian Fremantle, Iqaluit’s chief administrative officer, said council needs to find a further $700,000 in cuts to ensure that Iqaluit can follow through with its multi-million-dollar capital projects, funded in part by the GN.

“They can’t spend more than they’re taking in, which is what’s happening now,” Fremantle said in an interview during budget talks this week.

New expenses will bump the municipal 2005-06 budget to a proposed $17.7 million in spending, almost

$2 million more than last year. The most damaging expense comes from a potentially huge power bill caused by a leap in electricity rates under the Qulliq Energy Corp.’s proposed general rate increase.

Before approving the budget later this month, councillors need to find $463,950 in cuts to avoid a deficit.

Heavy equipment leases and proposed staff hirings are among the new expenses causing the gap between revenue and expenses.

But old expenses are the ones jeopardizing future capital projects, according to administration.

Fremantle repeated his warning this week that council still doesn’t have a budget for services like their recycling program, which he says costs upwards of $250,000 a year. Supporters of the program counter that recycling costs about half as much as Fremantle estimates.

He said they’re also overspending on the under-used transit system.

Without money set aside for these expenses, council has been dipping into reserve funds, which have declined more than $2 million over the last two years, and now hover around $1.2 million.

Fremantle said council will be “broke” if it doesn’t find deep enough cuts, or new sources of revenue, to put money back into the reserves.

“That’s being eaten away,” Fremantle said of the reserve funds.

Iqaluit is supposed to contribute around $19 million to their $50-million capital plan agreement with the GN, signed in 2002. The GN pitches in $31 million for some projects, but in some years, the projects depend entirely on municipal funding.

The cash crunch comes despite an extra $4 million in taxes that ratepayers approved in a plebiscite ordered by the previous Iqaluit council.

The decision to cut expenses comes at a time when council also has to decide whether to expand budgets for most of its departments.

Public works is asking for nearly $7.2 million to take care of the city’s roads, sewage, water and public transit. Despite significant cuts in administrative costs and the handling of solid waste, the department is expecting about $500,000 in increased expenses in all other areas.

The recreation department wants $2.85 million for next year. Its director expects about $300,000 more in expenses for running the arenas, playgrounds, the youth centre, swimming pool and several other facilities.

Emergency services is looking for about $2.1 million, almost $200,000 more than last year.

Administration wants $1 million, about $100,000 more than last year.

At the same time, economic development funds could fall to nearly $630,000 next year, a $100,000 drop from the previous budget.

The by-law department asked for about $590,000, which amounts to nearly $140,000 more than last year.

Council will give final approval to the 2005-06 budget on Dec. 7.