City of Charlottetown running $1.5 million deficit

Dave Stewart
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Charlottetown City Councillor Melissa Hilton delivers the budget at City Hall Wednesday during a lunch hour sitting.

The only thing the minister responsible for municipalities in P.E.I. didn't do Wednesday was write a cheque for the City of Charlottetown.

Communities, Land and Environment Minister Robert Mitchell attended the city's annual budget address, telling the media afterwards that he's very optimistic a new revenue-sharing model with municipalities can be worked out in time for next year's municipal budget.

For the first time in 23 years, the City of Charlottetown is carrying a deficit in 2017 — $1.5 million. The city says it was either run a deficit or raise taxes by five per cent.

The total deficit the city was facing for 2016 was $3 million, pointing to factors such as the extraordinary snowfalls over the past two years and a revenue-sharing model with the province.

Under provincial legislation, the city is not allowed to carry a deficit, but it doesn't appear there will be any penalties.

Mitchell says the formula will be changed.

"In some ways, I'm not totally surprised,'' Mitchell said following the budget address. "I have to commend the City of Charlottetown and all municipalities across the Island being able to reach balanced budgets over the last number of years.

"We are discussing a new revenue formula. I think we're making good strides and do believe we will be ready for (the) next fiscal (year).''

The province collects property taxes for the city and then returns the revenue. The problem is, because the formula was changed in 2008 from a tax credit system to a grant system, where the return can fluctuate, this means the province has collected more than $12 million that has not come back into the city's coffers.

Mitchell said the goal is to return to the more stable tax credit system.

"Absolutely,'' Mitchell said when asked if he feels the current system creates an imbalance. "It is something that has been escaping them over the last number of years when they didn't get the full value of growth.''

Mayor Clifford Lee, who has been fighting to have the formula changed almost since day one, is very optimistic.

"I anticipate a year from now we will have a new funding model in place,'' Lee said.

There is no tax increase and no rate hike in water and sewer. The city will pull in about $550,000 from hiking things like parking meter rates and fines as well as increases for ice rentals.

The city has made cuts, too.

Two vacant sergeants positions with Charlottetown Police Services won't be filled. Two vacant directors positions with the city corporation, fiscal services and development and public services also won't be filled. They've been vacant since the departures of Phil Handrahan and Joe Coady.

The deficit also comes on the heels of pay increases for mayor and council last July. Salary and benefits have increased from $360,000 to $458,186.

Coun. Melissa Hilton, chairwoman of the finance, audit and tendering committee, said she doesn't think it's bad optics.

"In all honesty, this was something we dealt with nine months ago,'' Hilton said, referring to a report on compensation last July. "I do hope the residents of this city do support the work that we do and what we receive for the tremendous amount of work that we do.''


By the numbers

$47.55 million - city budget for 2016

$9.66 million - budget for water and sewer utility

$3 million - city's deficit before hikes for things like parking meters and fines

$550,000 - what the city will pull in on additional fees and fines

$1.5 million - final deficit being carried into 2017 after additional fees and fines



Geographic location: Charlottetown

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Recent comments

  • Summerside Resident
    March 30, 2016 - 20:44

    Summerside went through this Concert Fiasco and gave away $2million dollars than paid Derek Keys law firm thousounds to chase it. By the way, this whole concert thing was in litigation before the electorate were evan told at the cottage vote. Same situation with Peter Kelly, all done underhanded to Council and Human Resources. That is why they got rid of him. NOW, Mayor Lee trumps his friend up and gets him the CAO position for the City. Same guy who gave City Councillors a big raise. Does any lawyers in the City know what a Conflict of Interest is? I cannot understand not one City applicant did not get this job, internally or outside. This is just not fair. This will come back to bit someone.

  • Indigo
    March 30, 2016 - 20:38

    @Hilton: It must be that this gig as City Council is interesting and rewarding enough to have her and the other Councillors, not to mention the Mayor, year after year. It must also be, that it was cooked up that as soon as they were elected last time, they would set out to fake that arrangement with Mr. Kelly to have their salaries increased. So I don't 'support all the work they do.' It is not public service any longer, it is a career , and they are loosing any respect they may have had. They are not that competent and are thoughtlessly wasting money. Wasting money, an

  • Independant
    March 30, 2016 - 20:26

    This is why my house is for sale and leaving this debt ridden city. I bet they cant wait for the new carbon tax to keep up their reckless spending.

  • Jimmy Buffet
    March 30, 2016 - 19:55

    Ha Ha Ha !!! And now Georgetown and Montague want to tax all the surrounding areas and bleed these people dry . This just turns my stomach . Time to leave this gentle island .

  • Amanda
    March 30, 2016 - 19:51

    How is this, the City, according to Provincial Laws, the City cannot run a deficit, - but they are proposing one anyway. They must know they can't do this, so are they just doing it anyway, p... on the laws ? The Province must enforce this law, or are they oblivious to the ramification of having laws and not enforcing they be followed? We need to see some discipline in the political halls, or society deteriorates. That can't be o.k. with anybody.

  • Jack
    March 30, 2016 - 18:53

    RUN A DEFICIT OR RAISE TAXES? How about cutting out some of the frills? Let us see the list of people we pay wages for at City Hall? I will bet, like the Department of Education just did, they could cut back on all the new positions they keep adding. How about the feeding frenzy at pizza and pop meetings? How about all the fee barbeques and other freebees during the course of the year. We don't need pancake breakfasts and all the rest that is being hosted by the City taxpayers. A million places where cuts could be done, - this budget is disgusting, and the councillors voting to hire Kelly and voting for this budget are abusing the taxpayers.

  • Peter Johnsson
    March 30, 2016 - 16:53

    The city anticipates these increases will bring in an additional $550,000, helping shave the deficit from $3 million to $1.5 million. Let me see ..... New math ... 3 Million less 550 thousand = 1.5 thousand thousand? (1.5 million for people without a cellphone/calculator and forsed to use their real brain). (obviously not city council, though, methinks).

  • Peter Johnsson
    March 30, 2016 - 16:49

    The good news is residents of Charlottetown aren’t being hit with a tax increase. Nope .... but we will be hit hard after the interest on the debt builds up. Wanna save a quick 200 thousand or so?.. IMO, get rid of Kelly before it's too late

  • Stan Hope
    March 30, 2016 - 15:13

    Ah yes ... the City Councillor's , who only show up at election time. Any other time it's like trying to track Big Foot.

  • Concerned
    March 30, 2016 - 12:23

    How can this be. Summerside is running a debt of app 69 million. I must be understanding this wrong if Charlottetoen is only 1.5 million

  • Vernon Cheverrie
    March 30, 2016 - 12:04

    If the city council knew that we were going to have such a high deficit, how in good faith could they give themselves such a nice raise along with all the other extras they get, shame on you all

    March 30, 2016 - 12:03

    Hilton should be hanging her head in Shame instead of smiling ... Hiring a Guy for 120K who Just gave them all a huge raise stinks to the high heaven...Shame on The Mayor and Council Shame.

    • david
      March 30, 2016 - 16:46

      It wasn't Hilton who hired Mayor Kelly it was Clifford Lee who seems to be the one lauding Kelly as the best choice. Funny there was no one in all of PEI who the City of Charlottetown thought was worth the $120,000 salary they are paying Kelly. The city collects it's taxes from island tax payers but can't support PEI when it comes to hiring. So much for supporting the local economy Charlottetown.

    • BUDDY
      March 30, 2016 - 20:28

      @ David...Lee, Hilton + 5 other councilors were there when the Kelly announcement was made...They all should hang their head ...Total abuse of Power...Shameful

  • mike
    March 30, 2016 - 11:39

    Hmmm I must say that is a very smart approach, an approach that should be in the case of paying off a deficit. About time we looked at other ways than increasing taxes! I cant complain about this....good job!

    • Cromwell
      March 30, 2016 - 20:28

      I'll have two of whatever you're drinking!

  • Jon
    March 30, 2016 - 11:30

    Let's not forget that council pay was also increased. Not a major amount but it is part of that deficit.