Runaway budget train

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Barring some miracle of good fortune or common sense, history will be made when city council sits down next year to review the draft budget for 2020.

For the first time in Yellowknife’s history, council will be asked to entertain a budget containing nine figures — $122 million to be precise. This year’s draft is still barely onside of eight figures at $95 million. Two years ago it was $77 million.

Allowances should be made for a tricky little line item called “amortization,” which will account for $15 million of city expenditures for 2019. It’s not actual spending but an accounting term for the depreciation of city assets.

Still, one wonders how the city got itself into this position so quickly and so deeply. Fifteen years ago city expenditures were $35 million even though the population at the time – 19,198 – is nearly identical in size to today.

Fifteen years ago the city was the jewel of the nation, literally. With two new diamond mines in operation and another on the way, the city proudly billed itself the “Diamond Capital of North America.” There are still three diamond mines in the territory, although by the time city council begins chawing those nine-figure budgets, only a few years of life is expected to be left for Diavik Diamond Mine and maybe another decade for Gahcho Kue.

The simply reality is that the city has been spending beyond its means for years and with storm clouds on the horizon, the ptarmigan are coming home to roost.

And there is more big spending ahead.

Within the 2019 budget is close to $80 million in costs to replace two of the city’s most aged infrastructures – the 35-year-old Ruth Inch Memorial Pool and the 50-year-old, eight-kilometre water line underneath Yellowknife Bay.

The city could save at least $15 million if it drew its drinking water from Yellowknife Bay instead of the Yellowknife River but residents have been signalling for years that they will not accept water from the bay as long as there is a chance – however remote – that arsenic from Giant Mine could contaminate it.

The city is hoping the feds will cover the expense of replacing the aging water line but its pleas have yet to be answered.

The pool is no longer suitable for a city this size. Council had a chance to get much of the bill paid by Ottawa and the GNWT but balked at the expected $70 million price tag for hosting the Canada Winter Games that came with that arrangement.

In any event, city expenditures are expected to greatly exceed revenues just as Yellowknife enters a period of great economic uncertainty — $3.5 million next year, $22.5 million the year after that.

There is plenty of trouble facing council with this budget and in the years ahead. The temptation might be to spend away as the city has always done and pat themselves on the back for keeping tax increases to a modest amount. That will be the easiest thing to do.

But it will not be enough. Unless the city can convince the already cash-strapped GNWT to fork over the estimated $11 million it short-changes the city every year, replacing the pool might have to wait, as well as a host of other capital expenditures.

It’s time council starts asking itself, are they going to be fiscal stewards of the city or be popular. Because if they can’t pay the bill who will?

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