City councillors are busy at this time of year as they read through reports and set priorities for heading into the future.

Budgets and bankruptcy

Last week I watched with horror the news story about San Jose, California.

Last week I watched with horror the news story about San Jose, California. I saw their glitzy new library with empty shelves and a $90 million police station sitting idle. I heard their mayor describe the situation as “service level insolvency.”

He meant that the city could pay their bills, but could no longer afford to provide services. In June residents will vote on a rollback of pension benefits — essentially breaking contracts with police and fire fighters.

Those contracts were negotiated when times were good, and competition among cities to fill those positions was fierce. San Jose (and others) sweetened the pension pot, but now (according to the mayor) they’ve got sugar overdose. They need that money to deliver services.

San Jose isn’t alone. Its neighbour Vallejo is the largest city in the US to go bankrupt and the sight of its crumbling streets and boarded-up storefronts gave me shivers.

How has this happened? More importantly, how do we not have this happen in Nelson?

It’s a timely question as council works through our financial planning (budget) process. And right away I want to say that Nelson is a long way from the crisis facing San Jose. We have challenges, for sure, but overall we’re in reasonable financial shape.

We begin our process by looking at a status quo budget — where are we at if we do what we did last year. Without considering new requests or initiatives, we have a half million dollar shortfall due to negotiated wage and benefit increases and lower revenues projected in certain areas. Our total budget is around $30 million.

To recover that half million through a tax increase would be an eight per cent increase for residential properties. I don’t think we’re going there!

Over the next couple weeks, staff will use their freshly sharpened spreadsheets to identify options to address the shortfall. And to perhaps consider new requests from departments; the police, for example, would like to fill an officer position that was frozen last year after a retirement.

Staff will look for new revenue opportunities. Like the Youth Centre did last year, taking over operation of the city campground and earning themselves a good chunk of change toward their operations. Like Nelson Hydro is doing, looking at developing a district energy system.

Staff will also look for ways to reduce costs. But I have to tell you that the proverbial fat, gravy train, and uncontrolled waste are pretty elusive at the city. This shortfall situation happens every year, and many pencils have worked and reworked how we do things.

An interesting comment I’ve heard recently, both in budget meetings and in the community, is that Nelson residents have very high service expectations. For example, a former Albertan was shocked at how quickly his street was plowed following a snowfall. I recently read about a city that saved thousands of dollars by not sending out the plows until three inches of snow were on the ground.

Are Nelson folks willing to accept modest service reductions, or might they get more involved in clearing sidewalks, caring for a neighbourhood park, etc.? During the 2009 citizens’ survey, 56 per cent of respondents wanted to maintain or reduce services with taxes unchanged. And 22 per cent supported improving services with higher taxes.

Two other facts are important. Cities must balance their budgets, so we don’t have a ballooning deficit to tackle. And the City carries very little tax-supported debt.

At the end of 2010, the City’s general debt was $13.3 million, but FortisBC and Selkirk College are repaying $12 million of that through long-term contracts. The utilities (water, sewer, Nelson Hydro) carry some debts for capital projects, but these are paid back over time through rates (not taxation).

So, we’re doing pretty well. But the broader economic uncertainty is certainly not over. We won’t be following in Vallejo’s footsteps, but we need to carefully chart our own steps forward.




Donna Macdonald is a Nelson city councillor who shares this Wednesday space with her colleagues around the table


Just Posted

Nelson Leafs humble Rockies 9-2

Leafs score 7 unanswered goals en route to win

Nelson Leafs fall in Kimberley 4-1

The Dynamiters took a 2-0 lead en route to the win

Nelson Legion to sell its building to tech company

Traction on Demand will purchase the building while the Legion will lease space

Climbing group launches fundraiser for Castlegar cliffs

TAWKROC wants to raise $60,000 to purchase the property from the owners

It’s the last day to vote in B.C.’s referendum on electoral reform

Ballots must now be dropped off in person to meet the deadline of 4:30 p.m.

VIDEO: This B.C. school leads country in vaccine donations to UNICEF

Federally funded Kids Boost Immunity uses quizzes to earn vaccinations

Boeser scores 3, Pettersson has 5 points as Canucks hammer Blues

Vancouver picks up impressive 6-1 win in St. Louis

B.C. police stop drunk driver who offered up burger instead of ID

Roadblock checks over the weekend found at least two other impaired drivers

In Canada, the term ‘nationalism’ doesn’t seem to have a bad rap. Here’s why

Data suggest that Canadians don’t see the concept of nationalism the way people do in the United States

Small quake recorded west of Vancouver Island

No injuries or tsunami warning after 5.4 rumble felt some 400 kilometres from Victoria

B.C. suspends Chinese portion of Asian forestry trade mission due to Huawei arrest

Huawei’s chief financial officer Meng Wanzhou was detained at the request of U.S. in Vancouver

Canadians spent $1.7 billion dollars online in December 2017

Online retail sales accounted for 3.4 per cent of total retail sales

2-year investigations nets $900,000 in refunds for payday loan customers

Consumer Protection BC says selling practices were ‘aggressive and deceptive’

New Kootenay East Regional Hospital District Board elected

Redeveloping East Kootenay Regional Hospital in Cranbrook a priority for new hospital district board

Most Read