I just wanted to make it clear that I am very much in favour of
giving consideration to options such as the issuing of Municipal
Bonds and borrowing from private lenders to fund infrastructure
improvement projects and selected public private ventures. For
the past decade we have had an obsession with avoiding taking on
any long-term debt as the Corporation of the City of Greater
Sudbury, but by doing so we have created such a tremendous
infrastructure deficit that we are forced to spend at least $50
million a year doing emergency patch-work repairs that are
merely putting us deeper into the hole and putting off the
inevitable. If we keep doing what we’ve been doing, how can we
expect to get any different results?
We cannot afford another four years of going hand in fist to the
provincial and federal levels of government begging for funding
or to ask for a larger share of the resource revenue from the
mining companies. We’ve been doing this without success for
years. We cannot continue to promote Sudbury as an attractive
place for new businesses to set up when our existing businesses
are leaving us and closing up because we are burying them in red
tape or we do not have the infrastructure in place for them.
The time for us to seize control of our own destiny and come up
with a different strategic plan that may very well include
borrowing money in order for us to stimulate our economy and
create growth in our construction, housing and business
development sectors. I am not afraid to say that this is an
option that I would like to give very serious consideration to
as soon as we take office in December. I am not saying that we
borrow and spend frivolously. But there are places where an
infusion of money would go a long way to putting this city back
on track. They say you can start a forest fire with just one
match if you light the match where the kindling is dry and ready
to burn. There are places where we could begin stimulus projects
and infrastructure renewal that would start a snowball in this
city and before long everything will take off again. We just
need to make sure we have the right plan and I think we have
candidates who, if elected, have the experience and wisdom to
support the right plan.
The first thing we need to do is make a list of all of the
projects we have on the table and identify the ones that are
absolute “needs” for this community. I am not in favour of
borrowing to pay for anything that we do not “need” at this
time. There are many things that we “would like” or may “want”
on our wish list, but those may have to be put to the side until
we deal with the things that we really need in order to get
control of our infrastructure deficit and stimulate growth that
will generate more tax revenue for the city. This infusion of
funding must be designed to generate a return on the investment
that in turn will be used to pay off the debt and interest
charges over time. All this requires is some careful and
thoughtful planning with business experts who have a handle on
the type of investments that will achieve our overall goals.
Councillors must then have the confidence in the advice from the
business experts to approve the plan and begin implementing the
elements of that plan immediately. While this is going on we can
be reviewing all other aspects of our operation and by the time
we find efficiencies the savings may very well be enough to pay
for the costs of financing leaving us even better off
financially that we were before. Borrowing may therefore
actually help us maintain taxes where they are or even reduce
taxes. Borrowing does not; in this case automatically imply that
taxes are going to go up.
I am hearing more and more support from candidates for the idea
of debt financing as a way out of our current state in this
city. We have tried to operate the City of Greater Sudbury with
cash flow for too long. It is like the homeowner who has a leaky
roof and every year repairs the new leaks with just enough
shingles to stop the leak. Year after year there are new leaks
and year after year he replaced the damaged shingles. After ten
years he realizes that he has spent all of this money repairing
his roof and it still leaks. The money he has spent repairing
the leaks ends up being more than he would have spent ten years
ago to replace the whole roof and he would have been able to
enjoy his house in comfort. This is where we are today in The
City of Greater Sudbury. We’ve spent more money repairing our
infrastructure during the last ten years than we would have
spent if we would have borrowed the money and done it right from
the beginning. There is no point in going on this way any
longer.
So, it is my position that we should at least give serious
consideration to the issuing of municipal bonds and borrowing
from private investors. We may decide that we are not able to
utilize this option. But we must at least put it on the table
|
ANALOGY
The City of Greater Sudbury has avoided getting a
"mortgage" to renovate our home, preferring to do
patch work with the money that is left over from our
annual "revenue". The problem is that we don't have
enough left over from our annual revenue to keep up
with the repairs that are needed. So each year we
end up with more to repair than the year before and
we have to use more of our annual "revenue" to try
to keep up, but it is futile. At some point the time
is reached when you can take out a mortgage to do
all of the repairs and then use the money from your
annual revenue to make the payments over time. It
costs you the same but at least you are living in a
renovated house while you are making the repairs and
not chasing your tail trying to keep up with the
repairs. In the meantime, if your revenue increases
because you don't have to spend all of your time
doing repairs, but instead can go out and increase
your revenue, it means that the mortgage payments
take up less of a percentage of your annual revenue.
I think the time has come for our "family" in
Greater Sudbury to consider taking out a mortgage.
|
| |
| ANOTHER EXAMPLE |
|
Let's say you have a flat tire and you are low on
gas. You can't use the car because of the flat tire.
But you only have enough money to repair the tire.
You can put the money into gas and make sure you
fill your tank, but then you can't go anywhere
because you have a flat tire. So you repair the tire
and "hope" you have enough gas to get home so that
you can get some more money to put gas in the car.
Some times you will make it home before you run out
of gas. Other times you run out of gas and you are
stranded. Now you have the tire fixed buy no gas so
you can't use the car anyway.
Take the same scenario with road repairs. You know
that the road needs to be replaced and the pipes are
getting old to the point that they might need
preplacing soon as well. The City Council only has
enough in the budget to give the staff enough money
to repave the road surface or replace the pipes, but
not both. It is decided that there is no point in
replacing the pipes if you can't resurface the road
since people won't be able to drive over the road.
So you resurface the road and "hope" that the pipes
last a bit longer. Eventually the pipes need
replacing, so now you go back with the money to
replace the pipes but now you need more money to
repair the road again because you needed to tear it
up to get at the pipes. If we would have borrowed
the money to repair the pipes and the road at the
same time, it would have cost us less money than to
go back and fix the pipes later. This is what we
have been doing for so many years and if we would
have done it right the first time we would have
saved money, paid for our mortgage and enjoyed
travelling over our road instead of wasting time
doing it twice.
|
Date: