Concern over Sarnia’s budget

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Looking at a few of Sarnia’s recent budgets up to the 2021 draft budget reveals some concerning trends.

The sum of the general operating budget and the water-sewer budget constitutes the total revenues for the city that come from taxpayers and users. From my perspective, a user is also a “taxpayer.” This total revenue is used to finance city costs and reserves. Reserves are then used to fund, to an extent, capital budgets, although these are significant contributions.

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For total revenues, the 2018 approved budget was $108.9 million. For the 2021 draft, total revenues are listed as $119.9 million (excluding the petrochemical levy). This is an accumulated increase of $11 million (10.12 per cent increase).

In comparison, the cumulative inflation for the same relevant period is 4.83 per cent.

Government pensions and (non-public) worker incomes increase shy of inflation. Private pensions can see increases significantly less. The city imposed “income squeeze” on “taxpayers” is represented by the difference between the city revenue percent increase (reflecting the accumulated revenue increase) and the cumulative inflation rate. In this case, the accumulated “income squeeze” is 5.29 percent. This means for $1,000 held at the end of 2018, the “taxpayer” now has $947 left ($53 less) for their personal needs and wants. Historical patterns suggest the city’s “income squeezing” will keep growing over time.

Looking at available city information on residential tax increases (excludes water-sewer) for the period covering approval of the 2019 budget up to the 2021 draft budget, the accumulated percent increase is 9.35 per cent. For the same reference period, the cumulative inflation is again 4.83 per cent.

The accumulated “income squeeze” in this situation is 4.52 per cent. For a household paying $3,000 in taxes for city part only in 2018, the tax in 2021 will become $3,281 while $3,000 in income will become $3,145. The “income squeeze” here means the taxpayer will have $136 less in their pockets.

Again, observations suggest this squeezing will continue to grow over time.

Looking at capital budgets, there was a total of $29.8 million for 2019. The 2021 draft has a total of $61.4 million, an increase of $31.6 million in just two years – a whopping 106 per cent increase.

In 2019, “taxpayers” (taxpayers and users) paid $17.6 million (59.1 per cent) of the capital budget. For 2021, “taxpayers” will pay approximately an astonishing $36 million (59 per cent) of the capital budget. This is an estimated increase accumulated over two years of $18.6 million or an incredible 105 per cent increase.

All these consistently significant increases are unsustainable into the future; maybe we need a better approach.

In 2019, Peterborough council instructed staff to come up with a 2020 budget increase limited to 2.34 per cent (inflation was 1.95 per cent).

This is a top-down approach versus the bottom up approach Sarnia uses. The Peterborough approach clearly embraces taxpayer concerns and long-term sustainability, requiring prioritization and trade offs, presumably made without sacrificing immediately critical needs.

Sarnia needs a tempered budgeting approach that respects “taxpayers” who are relentlessly getting squeezed.

Manuel Marta

Sarnia