Mayor says new fiscal arrangement will be achieved
St. John’s Mayor Dennis O’Keefe
Changes to the Municipal Operating Grants (MOG) system have forced the City of St. John’s to delay several capital projects, according to the chair of its finance committee.
“In our 2013 budget, we estimated a $5 to $7 million surplus from 2012,” said Coun. Danny Breen at Monday’s council meeting. “Our intention was to invest that surplus strategically into capital projects within our city and retain a small contingency for unexpected problems that may arise.”
As a result of last week’s provincial budget, the city is set to lose the $3.4 million it received annually through MOGs. That system will from now on only apply to municipalities with 11,000 residents or less.
Municipalities that exceed that number — of which there are seven in the province — will instead receive a one-time commitment of funds from the provincial government to use for capital projects. The city previously stated it will receive $8.5 million.
Among the capital projects the city intends to delay is the automated garbage collection initiative. That service is already offered in Mount Pearl. The City of St. John’s made its interest in automated garbage collection known last month during a council meeting.
The estimated cost of outfitting collection trucks and purchasing garbage carts in Phase 1 is $1.24 million. A further $3.67 million would be needed in Phase 2 for the purchase of the remaining carts required to serve residents.
By delaying capital projects, the city can transfer $3.4 million to its operating budget to make up for the loss of revenue related to MOGs.
Breen said the city still needs more details about the one-time payment from the province before it can take another look at projects that have now been delayed.
Coun. Tom Hann was blunt in offering his assessment of the provincial budget.
“With regard to the provincial budget ... I was disappointed,” he said.
“I’m not sure if the provincial government knew what kind of impact this budget would have, but I’m disappointed because sometimes the attitude of government and people in the Confederation Building is that we have lots of money. Well, we don’t.”
Immediately after Hann finished speaking, Mayor Dennis O’Keefe instructed council members to restrict their comments to the MOG formula. The mayor later added he has spoken with Municipal Affairs Minister Kevin O’Brien several times over the course of the last week about the province’s intentions of creating a new fiscal relationship with the city.
“That will proceed immediately,” said O’Keefe. “There’ll be full consultation on that issue.”