Mississauga budget proposes few new initiatives in 2022 but 4.3% increase for City’s share of tax bill
The City of Mississauga is facing financial pressure on many fronts. Municipal finance staff are trying to balance spending on new and enhanced services to provide for a growing city with a need to maintain existing infrastructure that demands immediate attention, including many assets that are decades old.
Over the last two years a new pressure has been decimating government coffers the world over — COVID-19.
All of this is brought to light in the pages of Mississauga’s 2022 financial blueprint, the proposed budget for the following year, which suggests extremely austere spending on new initiatives for the growing city. It instead focuses on maintaining and replacing existing assets that could cause significant problems if neglected any longer.
The stranglehold COVID-19 has placed on city revenues, along with years of past tax freezes during Hazel McCallion’s tenure, means Mississauga is left with few options to buy any shiny new items, without placing significant pressure on current taxpayers, many of whom are stretched thin by rising inflation as gas and food costs spike, while others are still trying to recover from lost income due to the pandemic.
Decades of frozen taxes prevented the City from keeping up with infrastructure lifecycle costs that mounted, whereas responsibly managed municipalities maintained reasonable tax increases to ensure future expenses could be balanced, and to fairly charge those who used the infrastructure an equitable amount of the costs for the services and assets they benefited from.
Instead, Mississauga is playing catch-up, after homeowners received a free ride for decades.
For 2022, staff are proposing a 4.3 percent tax increase on the City’s share of the overall bill for residential property owners (when blended with the Region’s portion and the Province’s education share, staff estimate a 1.5 percent overall increase to the 2022 tax bill) to help fund just over $1 billion for operating costs — an increase of $26.1 million from last year — and a $476 million capital budget. (The City’s estimate for the overall 2022 property tax increase is not in line with what the Region of Peel has presented; it’s unclear how staff reached their calculation).
“2022 promises to be another challenging year with COVID. We will see additional losses,” Paul Mitcham, Mississauga’s Chief Administrative Officer said at a press conference on the proposed budget.
Earlier this year, Mississauga staff estimated the loss could be as high as $60 million by the end of this year, due to losses in revenue from transit — ridership has only returned to approximately 49 percent of pre-COVID levels — and reductions to the payment in lieu of taxes (PILTs) received from passenger volumes at Pearson Airport (also drastically reduced throughout most of this year).
Mississauga's fire department and infrastructure investments will see the largest chunk of new investment in 2022.
(City of Mississauga)
With such tight restrictions, the only additions to the 2022 budget are those which are deemed absolutely critical.
“New initiatives that can be deferred with the least negative consequence are being deferred,” reads the City’s proposed 2022 budget. A full list of those projects being pushed down the line is not included in the budget document.
The City is proposing only 20 new initiatives for 2022.
Many of these new projects include additional staff members to maintain existing service levels or meet legislated deadlines. An additional staff member is required to help with the completion and implementation of the City’s asset management plan — legislated by the Ontario government to be completed by July 2024 — at a cost of $83,000, and one new staff member for the Mississauga Business Entrepreneur Centre to support small businesses, while new staff for the parks and forestry department to maintain parks and greenspaces will cost $110,000 in 2022.
The City is also hiring a full-time employee to help implement the ongoing stormwater asset management plan over the next few years, at a cost of $107,000.
Fire and emergency services have four new initiatives planned for 2022, including the creation of a Fire Public Education Program, the implementation of a proactive fire inspection program and the creation of a new standards and evaluation program.
New programs in the roads department, including the creation of a school bus stop-arm camera system, will cost $74,000 next year.
In 2022 the expected cost to maintain normal operations will be $1,013 billion, with fire and emergency services, MiWay, roads and business services taking the bulk of the money. Some of the impacts include the increasing cost of labour and operating supplies.
While new innovative initiatives can be pushed to later years, the same delays can not be afforded to the City’s aging infrastructure.
The city hosts 5,680 kilometres of roadways and when combined with the myriad of culverts, bridges, bike paths, walking trails, sidewalks and other transportation infrastructure, the bulk has a replacement value of approximately $5 billion.
Projects like the Port Credit Library (which has been closed) are being funded through the city’s capital budget in 2022.
(Natasha O’Neill / The Pointer)
There are risks to allowing this infrastructure to slowly age as people continue to use it and not allocating the proper investments into upkeep. A growing city creates a growing list of infrastructure for the municipality to maintain, and with a limited supply of revenue, municipalities across Canada are not able to keep up with the funding needs of their aging assets.
This is better known as the infrastructure gap.
Determined to keep aging infrastructure in a state of good repair, Mississauga must prioritize its spending toward the highest priority items, or those that could be at risk of a major failure. Many buildings have stood for more than 30 years making the majority of infrastructure built in the same timeframe nearing the end of its life expectancy.
According to the 2022 budget proposal, the City is unable to cover the total costs of keeping its assets in good condition over the next decade. Currently, the City is able to spend $206.6 million annually over the next 10 years to simply maintain existing assets in a decent state. But this amount leaves a gap of $40 to $45 million in state of good repair projects that will not be completed without additional assistance (whether in the form of grants from the federal or provincial government, or additional Gas Tax allotments). It means that over the next 10 years, the city’s infrastructure gap sits between $400 and $450 million.
To mitigate the risk of failure, Mississauga has taken out debt to close the gap, with the total debt load growing to $388 million since 2013.
Recently to help Mississauga recover from revenue pressures, the Ontario government announced it is temporarily removing the existing revenue growth cap of five percent on PILTs from Pearson Airport. The Greater Toronto Airports Authority (GTAA) has had this deal with the City since 2001, meaning instead of property taxes the airport pays a fee per passenger. However, the increase in that fee paid to the City has been capped, meaning while passenger volumes may increase by 8 to 10 percent annually, for example, the City will only receive 5 percent more revenue.
The pandemic’s impact on travel resulted in a $21.6 million loss for the City of Mississauga.
Despite the recent relief to the PILT formula, the payments have a two-year lag, meaning the City will not feel the change financially until 2024.
The City’s 2022 proposed budget document indicates a large portion of investments and purchases will be for transit plans of various capacities.
The capital budget will top $476.2 million, of which MiWay accounts for 37 percent of the funding. Some projects include $99.6 million for hybrid replacement of buses, $40.7 million for the design and construction of the Dundas bus rapid transit corridor and $6 million for the Hurontario light rail transit project.
By the end of 2021, 507 buses will be hybrid-electric, with the remaining 466 powered through clean diesel. Ridership has suffered greatly over the past year and a half. MiWay is at 49 percent of pre COVID-19 ridership levels, with more customers returning over the next few years. MiWay fares will be frozen in 2022 and services will not increase over the next year staying at 1.5 million hours in operation yearly.
Roads are the single most expensive asset the city needs to maintain, and over years will need new investments as the municipality grows. The 2022 capital budget proposes approximately $81.8 million for roads, which include projects like $4.9 million for Courtneypark Drive East and the Highway 410 interchange and $29.7 million for roadway rehabilitation.
Increasingly, climate change has been a reality cities are having to grapple with, but few have responsibly committed to. In 2022, approximately 13 percent of the capital budget will be outlined for various parks, forestry and environmental needs. Including a $3.2 million aerial spray for the LDD (gypsy) moth/cankerworm and $4.3 million for the emerald ash borer management program.
Other capital projects for 2022 include $5 million for the Port Credit library and Carmen Corbasson Community Centre redevelopment, $1.9 million for cycle tracks, $3.6 million for the redevelopment of Paul Coffey Park and $8.6 million for a new fire station at Tenth Line and Aquitaine.
Over the next few weeks the proposed budget will be under the microscope as councillors keep in mind the aging city assets, costly pandemic and effects on the individual homeowner paying the bills to keep Mississauga running.
Council is set to approve the budget on December 8.
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