Wednesday, 30 October 2013 14:54

City of Swift Current debt load set to increase with $14.9 million

Written by  Matthew Liebenberg
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The City of Swift Current plans to take on an additional $14.9 million in debt to finance infrastructure investment and to pay annexation compensation to the R.M. of Swift Current.

Councillors approved a notion of motion at their regular council meeting Oct. 28 to inform the public of their intention to consider a borrowing bylaw for this amount at a future meeting.
Mayor Jerrod Schafer provided a detailed argument during the meeting to explain the reasons for the additional debt.
“Very simply, the reason why the City of Swift Current has accumulated debt over the last number of years and the reason why we do now isn’t because we are spending differently from other communities within this province,” he said. “It’s because we don’t have the same revenues in Swift Current that they do in other communities and therefore we have no other option, but to borrow funds.”
He compared the low property taxes in Swift Current with the higher tax rates in the City of Yorkton. He noted Swift Current would have been able to fund capital expenditures on an annual basis from extra cash flow if it had tax parity with Yorkton.
“One of the conversations that’s going to have to take place more so than how much debt the City has is really the trade off between what our residents want,” he said. “Do they want incredibly low taxes compared to other cities in the rest of the province and a little bit higher in debt or do they want to have less debt and therefore start to catch up and close that revenue gap that other communities have?”
The City’s outstanding debt amount on Dec. 31, 2012 was $61.3 million, of which $3.2 million was current and will be repaid in 2013.
The additional $14.9 million in debt will bring the City’s total debt to $73 million. The current debt limit, as authorized by the Saskatchewan Municipal Board, is $75 million, but Schafer is not worried about how close the City is to that limit.
“There’s no risk in any of that to our community,” he said after the meeting. “The main benefit of the tax situation that we have is we are very affordable. A lot of the investments we’ve made are investments that are recoverable. … I think more than anything it’s the ability to make the payments and obviously we’re very secure in that regard.”
Swift Current residents have experienced two years of significant tax increases in a row, but he is not concerned the city will become a less affordable place to live during the next few years.
“We’re still very affordable by a long shot,” he said. “In fact, our taxes could increase a lot and we’d still be the most affordable city in the province. That’s not necessarily the goal.”
The proposed $14.9 million in additional debt will consist of $11.8 million to finance the 2012/13 capital infrastructure investment budget and $3.1 million to compensate the R.M. of Swift Current for the loss of municipal taxation on annexed lands.
The amount of $11.8 million will finance a number of projects. These include water and wastewater utility projects ($1.5 million) and solid waste utility costs of $834,304 for the construction of the new West landfill.
The remaining $9.4 million will be used to fund various municipal operations, including information technology upgrades ($585,733), facility improvements ($1.1 million), equipment purchases ($1.8 million), transportation network projects ($3.6 million), corporate initiatives ($238,592), planning and development projects ($247,637) and outdoor facility improvements ($1.6 million).
“Items that aren’t funded would be funded through a tax increase,” Chief Financial Officer Tim Marcus said. “The utilities, the water and the solid waste utility, fund theirs through the rates that they charge for their various services.”

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