Previously ambiguous, Greater Sudbury’s annual infrastructure spending gap has been laid bare in the city’s most in-depth report on the subject thus far.
Sitting at $130 million annually, city general manager of corporate services Kevin Fowke walked the city’s elected officials through the spending gap in council chambers last week during a presentation of the city’s latest Enterprise Asset Management Plan update.
This annual spending gap, he explained, is the “capital funding gap between the average annual requirement and the five-year historical average that we’ve invested.”
“It’s not a deficit that’s some kind of loss or a debt that needs to be repaid immediately,” he added. “It’s the gap between investments required and average investments made.”
Perhaps the most immediately apparent funding gap in Greater Sudbury is roads, with the ceaseless presence of potholes offering motorists a regular reminder of their middling quality.
The city’s five-year historic annual investment has been $35 million, when the amount needed to maintain city roads in their overall current condition is $80 million. This leaves an average annual gap of $45 million.
This component of the city’s Enterprise Asset Management Plan was released earlier this year, at which time it was noted that Greater Sudbury roads were on course to drop from their overall “fair” condition to “poor” by approximately 2030.
Other Enterprise Asset Management Plan areas included in the city’s final report include:
- Bridges and Culverts, whose average annual investment of $7.5 million exceeds the minimum requirement of $6.9 million, leaving no gap.
- Water and Wastewater Services, whose funding requirement is $96 million, which the city has fallen short of by $54.1 million.
- Stormwater Management Services, whose funding gap is $1.6 million, and annual requirement is $4.1 million.
- Fleet and Equipment, whose annual funding gap is $2.6 million and annual requirement is $10.6 million.
- Parking Services, which is covered by parking revenue so there is no funding gap.
- Building and Facilities, whose annual gap is $25.1 million due to the city spending $9.7 million annually against a requirement of $34.8 million.
- Parks and Recreation, whose gap is $1.1 million annually (requirement is $2.6 million).
- Solid Waste, whose gap is $240,254 against a requirement of $1.1 million.
City of Greater Sudbury staff have been working on their Enterprise Asset Management Policy since 2018, in response to provincial legislation which came into play the prior year and established a schedule of milestone dates for municipalities to come into compliance.
The first major milestone was hit in August 2021, when current levels of service were established for a handful of core services, which then-Ward 4 Coun. Geoff McCausland called a “beast of a report.” At the time, the annual infrastructure spending gap was estimated at approximately $100 million per year.
The report tabled last week filled out some missing pieces, and identified all municipal infrastructure assets, their current levels of service and the cost of maintaining the service, which brought about the new annual funding gap estimate of $130 million.
This provincially mandated milestone was supposed to take place by July 1, 2024, meaning Greater Sudbury was a half-year ahead of schedule.
The next big milestone is mandated to take place by July 1, 2025, and will include an asset management plan for all municipal assets, which includes proposed level of service, the activities required to meet those proposed levels of service, and a strategy to fund these activities.
This essentially means that when city council members vote on funding amounts at budget time, they will do so knowing what it means in relation to the service level they’ve aimed for.
Take municipal roads as an example. If city council were to decide an overall status-quo “fair” condition is an adequate service level, the annual funding requirement of $80 million would stand. Spending less than that would result in roads degrading below the established service level, and spending more would mean roads improve beyond the established service level.
“There’s still a lot of work to do over the next 18 months,” Fowke said. “There are way more needs than there will be financing at the end of the day.”
To put the current $130-million annual infrastructure spending gap into perspective, filling it entirely in one budget cycle would require the city to raise taxes by approximately 39 per cent on top of whatever else city council decides during budget deliberations.
Although service level decisions and a final Enterprise Asset Management Plan isn’t due until July 1, 2025, a series of related decisions are anticipated during 2024-25 budget meetings scheduled to take place Dec. 18-19.
The base budget tabled by city administration, which city council will debate and make a final decision on, makes some headway in addressing the city’s infrastructure gap.
Included in the recommendations by city staff will be increasing the municipal tax levy by an additional 1.5 per cent toward infrastructure needs. The city’s elected officials voted against a similar such increase during 2023 budget deliberations.
The city’s proposed budget includes a four-year capital budget for 2024-27 totalling $858.7 million, which averages out to approximately $214.7 million per year.
The latest five approved capital budgets according to annual budget reports were:
- 2023: $157.9 million
- 2022: $204.6 million
- 2021: $144.3 million
- 2020: $172.5 million
- 2019: $120.4 million
The five-year average from 2019-23 was approximately $160 million, which the proposed 2024-27 capital budgets exceed by 34.2 per cent.
The four-year capital budget includes $244.3 million in road work, which averages to $61 million per year. This exceeds the five-year historic average investment of $35 million, but falls short of the $80 million needed to maintain roads in their current overall status-quo condition.
On Dec. 12, the city’s elected officials approved 4.8 per cent annual water/wastewater rate increases for both 2024 and 2025, as part of a 20-year phased-in plan to pare down the infrastructure spending gap.
Budget deliberations continue at 1 p.m. on Dec. 18 and 9:30 a.m. on Dec. 19. They can be viewed in-person at Tom Davies Square and livestreamed by clicking here.
Tyler Clarke covers city hall and political affairs for Sudbury.com.
