SOME BUDGET ASSUMPTIONS FINANCIALLY RISKY

While gas prices are close to 70 cents a litre, none of us would bet on them staying there. Anyone who has seen how much gas prices have changed over the past year fully expects them to increase.

How much gas and diesel prices will increase was part of the City of Ottawa budget discussion. With buses, snow ploughs, police, fire trucks, ambulances and other vehicles required for City operations, the price of fuel has a major impact on the budget.

Where is it cost effective the City tries to get a locked in price. However, there are times when the premium the City would have to pay for a locked in price is so high that there is a good chance a locked in price would cost more. This leaves council approving a budget based on an estimate for fuel prices that will reflect the average price the City will pay during the year.

For council, it is tempting to use a low estimate. That way costs will appear to be lower. However, if the estimate adopted is too low, the city will experience a financial crunch and taxpayers will pay more in the long term. 

At the time staff started work on the budget, fuel prices were hovering around $1.40 a litre. A high price for fuel was incorporated into the budget estimates as a result. With the drop in fuel prices, staff are suggesting that the fuel price used when drawing up the budget be lowered to 90 cents a litre. It is higher than current prices for gas, but with price fluctuations it is a safe estimate of what the average price will be.

RESTORING THE CITY’S RESERVES

As a result of the unexpectedly high cost of snow clearing in 2007/2008, there is now a deficit in the City Wide reserve fund. The City has also dipped below the $50 million minimum that is considered necessary to deal with problems. This needs to be fixed.

Whether it is unexpected shortfalls due to bad weather or emergencies, we need to make sure we have the reserves to deal with any situation that confronts us. In the draft budget, City staff outlined how the funds in the reserves can be restored to a safe level. In preliminary discussions of the budget there have been suggestions that we can continue to reduce the funds in our reserves. This is not good for the long-term financial health of the City and is likely to result in additional costs for taxpayers down the road.

As I write this column, the budget discussion is still taking place. I am hopeful that all of my colleagues will recognize that any decisions we take in this budget must consider the impact on budgets and taxes in years to come. However, if there is an attempt to undermine the long term financial wellbeing of the city and leave taxpayers paying more in the future, I will not be supporting it.

WORKING FULL-TIME FOR KANATA SOUTH

I appreciate the chance to hear from you about issues affecting our community. You can reach me at 580-2752 (office), 580-2762 (fax), www.feltmateforkanata.com or peggy.feltmate@ottawa.ca