The City of Saint John must produce an annual budget in order to set property tax rates and water rates. The annual budgets must be balanced with no projected deficit. The City of Saint John maintains a General Operating Budget, Utility Fund Operating Budget and General Fund and Utility Fund Capital Budgets. The Operating Budget funds municipal services such as road maintenance, parks, emergency services (police and fire), and garbage collection, and many other services.
Saint John Water budget based on a user pay system. Rate payers are charged based on the Utility’s cost of providing services to each class of rate payers. Saint John Water currently has two classes of customers which are Potable Water Customers who receive treated drinkable water along with sewerage services and Industrial Customers who receive raw water only.
The City and Utility Fund Capital Budget goes toward maintaining and rehabilitating existing infrastructure, as well as investing in new development that will benefit residents and businesses for years to come and contribute to Saint John’s economy and quality of life.
2021 General Fund Operating Budget Highlights
The 2021 General Fund Operating Budget of $157.33 million was approved by Common Council on August 31st, 2020. The approved budget was the result of a multiyear effort by Council and Staff to address a $10 million structural deficit that the City was facing for 2021.
The 2021 budget is a historical financial reset with over $6.0 million being reduced from wages and benefits, along with over $4.0 million in reductions in operating costs and an increase in own source revenue by $900K. Common Council set the guidelines and financial goals to achieve these reductions in order to balance the budget and ensuring these financial goals have been achieved while maintaining the current tax rate of $1.785 per $100 of tax assessment.
The operating budget was prepared based on the principles, policies and financial targets set out in the long term financial plan. The budget now allows the City to become more financially sustainable, increased financial flexibility, reducing its vulnerability and ensuring there is accountability around how the operating budget in managed.
2021 Utility Fund Operating Budget Highlights
The 2021 Utility Fund Operating Budget will represent the third year in a row that will see no rate increase for ratepayers that use both water and sewer services. These ratepayers include both flat rate customers which will see the annual cost remain the same at $1,428 per year and metered customers will see no change in the cost per cubic meter and meter charge. The budget being presented does not include Industrial users of raw water.
The Utility has been aggressive in reducing costs in 2020 through staffing reductions, lower or no wage increases and with savings associated with lower interest cost on refinanced debentures. It is critical that rate stabilization continues to be high priority in light of the global pandemic, COVID 19, and due to the fact that rates have increased significantly over several years due to Safe Clean Drinking Water and Harbour Clean-up.
The Utility still is facing pressure on shrinking revenues. Flat rate customers declined again in 2020 over previous year to 15,815 accounts. Also, with the closure of Saputo at the end of the year, the revenue loss from this one account is approximately $225k. The impacts of reduced meter revenue will likely continue into 2021 and the budget has included an estimate for this loss in revenue. Rate stabilization will continue to be challenging if the Utility does not experience growth in both residential and commercial customer base.