Published Articles

Municipalities Need to Tighten their Belts

Our municipal councils are now in the process of preparing preliminary budgets for 2010. No doubt this task will be a particularly tough job this year as we are only starting to see shades of the economy picking up. Individuals and businesses are still pretty cautious with their money.

With that in mind, it is of utmost importance that municipalities also exercise prudence and caution in their budgeting process. The global economic recession has affected residents and businesses alike. There are many workers unemployed and many businesses that are just hanging on through the economic downturn. It is essential that property tax and fee increases be kept to a minimum in the next budget year.

The businesses that have survived the economic crisis had to critically examine their expenses and adjust them to the reduced income available. Municipalities need to take a similar approach to their operations. Unfortunately, that sort of cautionary approach is not the way municipalities have habitually budgeted. Generally speaking, municipalities will look at their revenue needs to cover operational increases and projects for the year, and then set their tax rates to individuals and business such that they collect the required funds. This has resulted in tax increases that are often in excess of 5%.

Now during a boom economy when business growth and personal income growth is in the same area, those increases may be supportable but such budget increases are ill advised on the heels of such a marked recession. This year, communities up and down the Island need a more prudent approach.

The recent twelve months has seen significant revenue drops in all areas of our economy; whether it is businesses who are just pulling through or employees who are not receiving cost of living raises at all. Municipalities must recognize the economic reality of its business and consumer residents.

The path to prosperity for our community is to support and encourage business, which provides the vast majority of employment. As businesses recover and provide employment, the resident situation will improve. As a Chamber, we encourage municipalities to examine innovative solutions to hold the line on service levels at the same time as reducing the cost of providing those services. This is a difficult task but it must be undertaken to ensure the fastest possible economic recovery for our communities.

Articles - 2010

Articles - 2009