Rising inflation means the Town of The Blue Mountains will see the cost of maintaining its assets go up in 2023.
At its committee of the whole meeting on Jan. 9, council approved a staff report outlining the town’s asset management plans for 2023.
Deputy Treasurer and Manager of Accounting and Budgets Sam Dinsmore presented council with a report that outlined the impacts the town’s formal asset management plan will have on the proposed 2023 budget, which will be coming to council in the near future.
The Blue Mountains has a full asset management plan that outlines all of the assets it owns and maintains and their replacement costs. The town owns approximately $637 million in assets (the numbers are from 2020), with half of those being local roads.
“We have a complete asset management plan, which is a good place to be, we have a full picture of all our assets,” said Dinsmore. “The town is in a very good position.”
The town currently has a gap between the amount of funding available for capital asset management each year and the amount needed. Dinsmore said the goal is to decrease that gap, but with limited financial resources available there are three main ways to do that: finance more spending with long-term debt, delay capital spending on assets or cancel capital spending.
He said the town’s policy prefers the avoidance of the use of long-term debt for projects.
“Long-term debt is a financing tool. It’s not a funding tool,” he said.
The town’s main source of funding for capital requirements is money from the annual property tax levy. Each year, the town collects money from taxation that is transferred into reserve for future capital needs.
“It’s better to save the money and earn interest than to have long-term debt and pay interest,” said Dinsmore.
In 2022, the town collected $2,589,500 from taxation for capital purposes, it collected a further $1,551,340 from water user fees and $1,085,306 from wastewater user fees (the water and wastewater systems are user-pay operations and do not receive money from taxation).
With the non-residential building construction price index at 15.6 per cent in 2022, town staff have increased the asset management reserve transfers in the proposed 2023 budget by the same percentage.
Coun. Shawn McKinlay praised staff for the report and said the information it contained was easily “digestible” and he appreciated the amount of work done by staff on the document.
