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We’re not alone: Mayor on what PEC is facing

By way of introduction to a full afternoon of debate and discussion, Prince Edward County Mayor Peter Mertens explained for council and about 50 people in the Shire Hall gallery, the 92-page Eastern Ontario Wardens’ Caucus 2012 Report on the Financial Sustainability of Local Government in Eastern Ontario.

“Often we believe that here in Prince Edward County, that we’re faced with a set of circumstances that are unique to us. This report clearly shows us that we’re not alone.”

Mertens explained last year’s budget sought a one per cent decrease in the municipal portion and a two per cent increase in the external agency portion for a total increase of just over one per cent.
“Almost the entire budget revenue went to our operating budget… there’s very little money for anything else,” he said.

Mertens reviewed the report’s executive summary to set the framework for what council is facing.

“The Eastern Onario Financial Sustainability Update Project paints a sobering picture of the road ahead for local governments in the region and adds a sense of urgency to future budget and policy deliberations at the local level as well as to discussion with provincial and federal  levels of government,” the report states.

“Ultimately, what this report found is that we cannot fix our own problems,” said Mertens. “Everything that we can do and take advantage of without sending taxes sky high, requires input from provincial and federal govenrments.

The report, Mertens said, was intended to become the base document for future discussion and negotiations with other stakeholders, including other levels of government, about policies, program design and service delivery models.

Some of the issues here:
-Limited base from which to pay for local services.
-Lower median incomes 13 per cent below provincial average
-Higher percentage of population 65 years of age or older 21.7 per cent – second highest in Eastern Ontario
-Lower percentage of income from earnings
-Persistently higher rate of unemployment

More than half of the working age populations of rural Eastern Ontario commutes to work. In that respect, Mertens said Prince Edward County is out of step with the rest as 36 per cent here go outside of the County to work.

-Limited financial flexibilty to respond to more challenging times.
“We have extreme reliance on the residential tax assessment (due to limited commercial or industrial assessment). Industry in Eastern Ontario is centred on the separated cities – in our case Trenton and Belleville and Napanee.”

-There has been a dramtic increase in local government debt.  “The funding that we received over the last couple of years was a boon to us but we still had to pay one third of that, so our debt has spiraled.

-Deteriorating net financial position.
“The county in 2000 had a positive asset value of $9.4 million. At the end 2011 we have a liability of 46.2 million dollars. We have the inability to build reserves for either working capital or to fund infrastructure on our present model. One small light is a provincial commitment to upload social services to relieve some pressure.

-Low growth projections for population.
“We reduced our population by 200 and that’s not anticipated to change. In the last five years we built 522 new homes – average of 100 per year. With two people per home that’s 1,044 new people entering the County. In last five years we had 1,375 people die, so we can’t even keep up because also in the last five years, births averaged 30 a year and this doesn’t include outward migration.
“Those average 100 homes a year provide us roughly 250-260,000 in property taxes which represents one per cent of our budget. Ninety per cent of our taxes come from residential. If we want to stay even with the cost of inflation we have to start building 250 homes a year. And that doesn’t improve our condition, it just keeps us even.

-Limited growth potential from other sources – fees, user fees, taxes from industrical and commercial.
“All communites in Eastern Ontario regardless of their model, or how much money they have put in, have consistently lost their industries and are unable to replace them. They locate in cities where there is a larger pool of employment or not in Eastern Ontario at all. Separated cities are having the same problem.”

Mertens said the Eastern Ontario Development Plan program bar to get funding is so high that most of our industries can’t quality.
“Seventy-six per cent of our industries are 10 persons or less. To be eligible, you need to  have more than 10 people, commit to creating jobs and investing $400,000 over three years. Very few of our industries can meet that threshold. |One of the main issues that the wardens tried to address is to lower the threshold to make more small industries eligible for this type of capital.”

-Limited resources with which to address major infrastructure challenges.
“Right now we’re able to make money to pay our operating, with very little left. But we have 800 million dollars worth of infrastructure in PEC. Regardless of whether it’s a road or a building, it no different than your own home, it deteriorates over time. So you either put money in the bank for the time you need to fix the roof, or when the roof goes, you pay it in one lump. We have the distinction of not being able to put money away for that time the roof needs to be replaced, we don’t even have enough to pay it in one lump. And that’s where in Eastern Ontario, trying to make ends meet, some change in the model of financing needs to be done.

Local governments unable to preserve the value of assets
“Maintaining value is looking after them and we all know that’s what we should be doing because costs of repairing once it breaks are substantially higher than if you maintain them.

“In Eastern Ontario we look after the bulk of the roads. We look after roads that no one, or very few people live on, so the costs for us is 10 to 20 times per household higher than other municipalities – and that is not reflected by the federal or provincial governments.

Mertens told councillors he hoped to see opportunities for collaboration and urged them to be creative rather than reactive and to be open to all ideas.

“Together, these data paint a picture of a region which – without a creative response – will have increasing difficulty sustaining local government services in the years ahead. In virtaully all cases, these financial stresses did not develop overnight, nor will they be resolved overnight. However, there is an increasingly urgent need for all levels of govenrment to begin the process of developing policies and financial strategies which recognize the limitations of the assessment base and its ratepayers, enable local governments to better manage costs of service delivery and create more prosperous local economies.”

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  1. Mark says:

    Since the prior council’s keen eye on the budget is being brought forward ,isn’t this the same council that cut the sweetheart deal with the former CAO, allowing him to work 4 days a week for fulltime salary and benefits. I guess the budget situation wasn’t so severe that we required the top gun to be at work keeping a watchful eye on the escalating debt situation the County has fallen into. There is just no accountability for the use of taxpayer’s dollars.

  2. John Thompson says:

    I totally agree with Richard Park’s comments. Some of us on the last Council tried consistently to bring that department’s budget closer to reality. BTW, add Salt Spring Island to the list of travel junkets.

    Another boondoggle was the accelerated roads plan which we did manage to kill. The plan which was being implemented was that roads spending was intentionally more than taxation and resulted in the current roads dept of about 9 Million. It was to result in a road system which would be cheaper to maintain so that taxes could repay the debt later. That didn’t happen of course.

    We also averted a major disaster by ending discussion on a possible expansion of Shire Hall for central admin at an estimated cost of 7-10 Million. The Edward Building lease is very cheap by comparison. Our hope to save the demolition of the adjacent building was thwarted as the walls were coming down when we entered Shire Hall for our first business meeting. Couldn’t win them all, could we Richard?

  3. Vic Alyea says:

    We are in the state we are in large part because we elected a guy named Mike Harris a few years ago who played on our collective greed by promising us all tax cuts. In order to fund the tax cuts provincially he had to download provincial costs like roads, bridges and social services onto the municipalities, along with cutting a bunch of other things like education and health care. So much for the Common Sense Revolution! A second reason that we are here in this situation is because previous Picton town councils did not plan for nor levy the appropriate charges to create reserves to fund water and sewage plant replacements. There are other reasons but those two are major ones. Of course it is all hindsight but worthy of keeping in mind as plans are made for the county’s future. Finally I disagree strongly with Richard’s assessment of our Economic Development Dept. over the last ten years or so. We would have been in a lot worse shape if that dept. had not actively marketed the County in the way it did. I commend Dan Taylor for his vision and hard work on behalf of the County.

  4. Doris Lane says:

    Richard i agree with you completely. Instead of hiring another staff member for economic development we should be putting our money where it is needed. I was shocked about the trade shows that you said were attended be staff.
    I realize that you were a member of the last council and this is something that you would be aware of.

  5. Richard Parks says:

    Mayor Mertens’ report confirm’s one thing that many of us have suspected for some time. The County’s Economic
    Development Strategy, for the last 12 years has been an complete failure, and a waste of taxpayer’s money.
    Despite the hoopla and swagger surrounding this Department at Shire Hall, it hasn’t provided any return on the time and money invested.
    We are, worse of than a number of Eastern Ontario Municipalities in terms of income levels, the age of our residents and tax assesment.
    We could have been putting $5-$800,000.00 every year for the last 12 years into reserves instead of squandering it on junkets and trade shows in California, Chicago and New York City.

  6. Capt Chris Holder says:

    The facts have finally been expressed in terms that are simple to understand by all. Now it is time to deal with this reality. We are all in this together and must find a way to deal with this together. What is best for the whole of the county and not individual agendas.

  7. Doris Lane says:

    Thank you Mayor Mertens for that comprehensive report–I urge everyone to read it. We can not go fron a surplus in 2010 to a deficit in. 2011 We do not have the population,building increase or industry to sustain us so we have to cut everything but essential services

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