Funding important local government infrastructure is a complex undertaking involving careful planning, prioritization of projects according to importance, fiscal responsibility and provincially-mandated financial rules on borrowing.
This column will hopefully serve as an Infrastructure 101 overview of these complex factors at play.
Successful major projects usually get funded by a combination of reserves built up over time through local taxation, long-term capital borrowing and perhaps grants from higher levels of government. I say "perhaps" because there is no guarantee, in spite of considerable efforts to apply for them, that grants actually might come through.
There are significant constraints with each of these funding pathways:
Local taxation: Salmon Arm proactively allocates monies to reserve to fund future projects each budget year. We save up over time to reduce the amounts we inevitably have toborrow for major projects. It’s a good practice. However, there are implicit limits as to what property tax loads local residents can handle. All B.C. local governments have to rely on property taxes on residences and businesses as their primary source of revenue. Heading into Salmon Arm’s 2025 budget process, a one per cent tax increment equates to approximately $224,000 of revenues to the city. It would obviously take a long time to fund even one multi-million-dollar project solely through local property taxation!
Long-term borrowing: There are provincially mandated limits to the total amount of long-term borrowing a local government can take on. That’s both a fiscal reality and a prudent approach. It’s also prudent not to borrow to the cap max and then have no borrowing capacity for unplanned needs. On top of that, any proposal for long-term borrowing needs to be fully costed out in current dollars and be approved as a shelf-ready project through assent voting by our citizens. Borrowing is a key fiscal tool but the cap on total borrowing means that multiple major projects have to be prioritized and scheduled over time to fit within those cap limits.
Grants: The city actively monitors for grant opportunities and applies when the timing is right but actually getting one is not a given. This is sometimes contrary to public perceptions and hopes. Any plan that relies on a sizeable grant portion to complete a project is less likely to ever get a shovel in the ground. Additionally, funding grants are almost always heavily over-subscribed with other local government applicants. Further, recent signaling from higher levels of government indicate that recreation facilityinfrastructure grants are not being highly prioritized by them. It doesn’t mean that the citydoesn’t apply for grants but a lot of factors need to be in place to maximize the chances of being a successful grant recipient.
The city is in good hands with both fiscal and engineering expertise to define our infrastructure needs. It’s council’s role to determine the priorities of these major infrastructure needs and how to fund them within the financial parameters.
Tim Lavery is a councillor for the City of Salmon Arm.
