City deals with "extraordinary" debt

Delivering her report last week on the financial position of the City, a procedure leading to the tabling of the annual budget in mid-December, Marks noted that the last time a finance report was filed—in 2001, prior to merger—the City of Westmount had the highest rating of any municipality in Quebec (AA+) from Canadian Bond Rating Services.

"Westmount is now responsible for an extraordinary amount of new debt accumulated in the past five years and we intend to implement a very detailed strategy to deal with it," she said, adding that a way must be found to resume Westmount's investments in infrastructure "without further unreasonably encumbering future generations in our community with additional debt."

Marks said a key element of the strategy will be an effort to return to full pay-as-you-go financing for local capital works projects, eliminating the need for new debt. During the year 1999, Westmount's capital expenditures amounted to $6.3 million, of which only $1.2 million was charged against loan bylaws, and even that was for an extraordinary project through infrastructure grants.

The current picture of the 2005 year-end results, a preliminary forecast of the 2006 revenues and expenditures, the state of the City's debt and the overall direction of the 2007 budget with capital expenditures until 2009, is quite different.

As of last Dec. 31, the former Borough of Westmount's total operating budget was nearly $21 million allocated by Montreal. It was increased at year-end to just over $22 million to offset unionized labour costs. Total borough revenues were recorded as $2.5 million, resulting in an operating surplus of nearly $206,000.

Capital expenditures during 2005 amounted to about $2.5 million, all of which was financed through loan bylaws. Prior to forced merger in 2002, Westmount had financed routine capital expenditures on a pay-as-you-go basis. "Regrettably, Montreal did not permit us to use this method of financing during the merger years," said Marks.

The 2006 operating budget was set at $33,751,000 and Westmount expects to close the year with a surplus of $200,000. However, the projection could change considerably between now and the end of the year, especially if bad weather results in higher than expected snow-removal costs. The final dividing up of accounts between Westmount and the City of Montreal could also make a difference.

The former City of Westmount's total unfunded debt at the end of 2001 stood at $2.1 million and was the direct result of an austerity policy implemented in the early 1990s. In the four years of merger with Montreal, all capital expenditures were financed through loan bylaws sponsored by Montreal. As a result, Westmount now has a total debt of $37.8 million which will have to be paid off gradually.

Looking forward to 2007, Marks said that keeping local taxes in check while maintaining service levels will be city council's single greatest priority. Over the past five years, the tax bill for the average owner of a single-family dwelling in Westmount has increased about 50 per cent. The 2007 operating and capital works budgets will be formally presented at a city council meeting to be held on or about Dec. 18.

"Now that Westmount city council has full control over its local budget again, we intend to take all the steps possible to prevent any tax increases in 2007 and beyond from being more than the rate of inflation," said Marks, adding that of equal importance will be council's continued effort in collaboration with the other Montreal suburbs to monitor the activities and expenditures of the Agglomeration Council.

"We have always said that Westmount is prepared to pay its fair share for services provided by the Agglomeration, but we will continue to challenge any costs transferred to the Agglomeration by the City of Montreal that are unreasonable or cannot be justified. The Agglomeration Council has the responsibility of keeping its 2007 taxes in check, as well, and we intend to hold it to its obligation."