Charlottetown deficit budget brings mixed reaction

Charlottetown Coun. Jason Coady says the city's decision to run a $1.5 million deficit is "disappointing," and is expressing reservations about city councillors taking a substantial raise at the same time.

Councillor questions decision to take raises while cutting grants and departments

Coun. Jason Coady, in the foreground to the right, is expressing reservations about council's deficit and pay raises. (CBC)

Charlottetown Coun. Jason Coady says the city's decision to run a $1.5 million deficit is "disappointing," and is expressing reservations about city councillors taking a substantial raise at the same time.

Funding for council salaries and benefits is set to increase from about $360,000 in 2015 to $458,186 in 2016. 

"We've made some tough decisions within our various departments, and maybe the council portfolio could have been looked at in terms of wages or travel expenses," said Coady. "I think we have to explore all options and have everyone give a little to the middle." 

Charlottetown Coun. Jason Coady is questioning council taking raises while running a budget deficit. (CBC)

"At least have a discussion to see if it is necessary to allocate those kinds of funds when we're projecting a $1.5 million dollar deficit." 

A deficit is not good for residents or businesses in the capital, Coady added. "It should raise some red flags for sure." 

Charlottetown did not consider postponing, reversing or staggering the pay increases, said finance committee chair Melissa Hilton.

"I do hope the residents of the city do support the work that we do and what we receive for the tremendous amount of work that we do," Hilton told reporters after the budget was announced. 

Decisions on the pay raises were made last year, Hilton said. 

"This was something that we dealt with nine months ago," she said. "We did budget for it." 

Meanwhile, Hilton warned some community grants will be cut this year.

"Some organizations will see a cut or decrease within their funding," Hilton said. 

"It was intended when this was first started that it would be seed money for different organizations and after x-number of years you realize they come to expect it."

While the City appreciates the hard work that volunteers have done in a number of organizations and events, Hilton said, other organizations are seeking seed money too.

Deficit 'not surprising'

"The Municipalities Act does not allow municipalities to carry a deficit," Robert Mitchell, P.E.I.'s minister of Communities, Land and Environment, told reporters after the budget announcement. "Of course, as was indicated in the budget document, this has happened before." 

Finance Committee chair Melissa Hilton says she hopes residents support 'what we receive for the tremendous amount of work that we do.' (CBC)

Mitchell said he was not surprised, noting the funding structure for municipalities has been frozen since 2008. He said Island municipalities were to be commended for balancing budgets for the past eight years. 

"We are discussing a new revenue formula. I think we're making good strides there," Mitchell said, adding he plans to have that ready for the next fiscal year.

In the meantime, Mitchell said he will encourage Charlottetown to further reduce expenditures in an attempt to balance the budget, but will not take punitive action. 

Kudos from business

The Greater Charlottetown Area Chamber of Commerce, which represents nearly 1,000 businesses, commended the city for not increasing property taxes or utility rates.

"The chamber continues to advocate for a return to a fair and consistent method for calculating the municipalities' portion of property tax revenue," said chamber executive director Penny Walsh McGuire in a written release. 

"This issue is still a priority for the chamber and we continue to support our municipal partners of Charlottetown, Stratford and Cornwall in their efforts to achieve a resolution."

Walsh McGuire said the chamber is pleased to see the city continue tax incentive grant programs.

"Development incentives such as this are important to support the continued growth and vibrancy of the city."

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