City administration wants to spend more than $62.1 million on capital projects during the next five years, but is facing a shortfall of revenue as early as 2022.
The general capital budget provides the funds that allow the City of Moose Jaw to undertake major construction, renovation and rehabilitation projects. This particular budget is comprised of the general capital reserve and the land development reserve. The general capital reserve funds all core infrastructure projects.
According to the 2021 budget document, city hall expects to have $43.1 million in capital funding available during the next five years. The sources of funding for the general capital reserve include:
- SaskPower municipal surcharge: $15.96 million
- Municipal taxation of $3.93 million
- Investment income: $12.52 million
- Land sale proceeds: $5.24 million
- Parks dedication reserve: $40,000
- Federal and provincial funding: $830,240
- SaskEnergy municipal surcharge: $4.59 million
Based on the available funding in the general capital reserve compared to the total funding required, city administration expects a surplus of $15,399 next year, followed by deficits of $7.47 million in 2022, $12 million in 2023, $13.6 million in 2024 and $15.3 million in 2025, for a total shortfall of $15.3 million.
Some of the shortfalls are because the provincial government reduced expenses in its 2017 budget, finance director Brian Acker explained during a recent budget meeting. That affected Moose Jaw since the province took away annual grants-in-lieu funding of $1.3 million, which flowed into the capital budget.
During that budget, the province also added six per cent in PST onto all construction projects.
“Again, a very significant blow to this capital budget,” said Acker. “Once we get into 2022, we struggle to be able to balance, and what we end up doing is pushing projects out each year.”
Land development reserve
The land development reserve provides funding for land development projects, with excess revenues redirected to the general capital reserve to fund needed infrastructure projects, the budget document said.
Major projects that city administration has planned next year include servicing land for the Canadian Tire development on Thatcher Drive and servicing land near the Moose Jaw Agri-Food Industrial Park for the Great Plains power station, along with 90 acres north of that. SaskPower is expected to cost-share on the industrial park project as per an agreement.
City hall expects to make more than $3 million in sales from the Canadian Tire deal, which will go back into the general capital reserve, said Acker. The cost to service the industrial park will cost $2.8 million.
“We certainly expect over the next couple of years (that) that money will be more than recovered several times over,” he added.
According to the budget document, the land development reserve faces a shortfall of $3.7 million next year, $3.4 million in 2022, $1.1 million in 2023, and $967,905 in 2024, with a surplus in 2025 of $1.02 million.
Equipment reserve
The equipment reserve fund provides money to purchase equipment when required, especially when items need to be replaced.
City administration expects to require $14.9 million during the next five years to fund equipment replacement. Public works, transit, parks and recreation, and information technology are the departments with the biggest needs during that time.
After depreciation is considered, a deficit in this account of $25,473 is expected in 2021, followed by surpluses of $60,217 in 2022, $21,619 in 2023, $45,945 and 2024 and $19,622 in 2025, for a total surplus during the next half-decade of $121,930.
City administration also expects to receive about $1.25 million annually from income from the city’s investment portfolios, the report added. This extra income is expected to allow the annual equipment reserve contribution to decrease by a similar amount, resulting in a reduced need for funds from the municipal tax levy.
