SHADOW OVER PERTH'S FINANCIAL FUTURE

This is the first of a twopart story on the town's financial future.

A triple threat of inflation, the rising cost of labour, and an aging population are casting a dark cloud over Perth's financial future.

"This will be the fun part of the meeting," said town treasurer Brian Burns, as he laid bare the town's financial future at town council's committee of the whole meeting on Tuesday, May 10.

"We're here to the talk about the future," one in which the town needed to take "a fairly hard look" at almost everything that the town does, in particular, the asset management plan. He painted it as "an inflationary problem compounded by an asset management problem," along with demographics.

"The workforce is shrinking, so the cost of labour is driving up costs," said Burns. At the moment, "this the highest inflationary rate in 30 years," and, "it is not predicted to decline."

DEMANDS

There will be other demands on Perth's future, such as the redevelopment of Highway 7, which will require a retrofit of sewer and water services in that area of town, likely in 2026, to a projected cost of $7.4 million.

Playing havoc with these figures, according to Burns' projected numbers, is the 17.2 per cent increase in the commercial construction price index for 2021, and an estimated 13.6 per cent increase in the commercial construction price index for 2022. Current replacement costs for vehicles and equipment were also updated to 5.7 per cent in 2022. As such,

price impacts have affected the costs of the Church and Foster street projects, vehicle replacement costs and even the pool roof.

BUILDINGS

Total replacement costs for the town's pool and arena,

for the years 2030 and 2035 respectively, have increased from $25 million to $58 million, a jump of $33 million.

The public works garage, the water tower, and

town water plant, are also coming closer to their end of life.

"A lot of infrastructure was built when the baby boomers were coming into the economy," said Burns. The water plant was built in 1963, and the water tower in 1939, while the public works garage was built in 1965. He suggested an engineering review this year to see what needs to be done at these facilities.

The summary of the town's owned capital assets, as of Dec. 31, 2021, was stark. To replace everything, from bridges and culverts to roads, vehicles, buildings, recreation facilities, sanitary sewers, and so on, would cost $354,925,124 in 2022. The anticipated end-of-life replacement cost — $1,046,275,389.

THE BILL

The town is looking at about $132 million in capital cost projections, a jump of $95 million, between 2022 and 2035, which is "not realistically achievable by the Town of Perth," said Burns. "Unless you increase property taxes by 100 per cent next year ... We've got a problem. You can't ignore it."

Here is a list of the projected capital expenditures the town is looking at between now and 2035:

• Landfill: $1,543,066

• Highway 7 contingency and consulting: $1,697,812

• Land improvements (primarily parking lots): $2,456,779

• Recreation facilities: $58,050,000

• Buildings (excluding recreation facilities): $9,067,011

• Vehicles: $5,177,420

• Equipment: $3,385,714

• Roads: $49,867,936

• Sanitary sewers: $29,320,665

• Storm sewers: $5,082,721

• Water mains: $24,197,960

• Bridges and culverts: $2,534,358

• Major maintenance: $8,555,076

The total budget would be $200,936,518.

Already, town workers are trying to do the best they can, but there are signs of strain. The town has a "sidewalk plow (that) we can't get parts for because of a shortage of parts," said Burns.

To maintain services, "we're going to have to increase property taxes. Hate to say it."

OPTIONS

Other options to deal with this dilemma, according to Burns, could include:

• Taking on as much as $25 million in debt to deal with projects now while the prices are lower than they will be.

• A moratorium on new projects.

• Removing the arterial road project from town plans.

• Handing some townowned roads back to the county.

• Conducting an engineering study to confirm values in projections.

• Seeking additional capital grants.

• Property tax increases.

• Water rate increases.

• Extending the useful life of assets — although Burns warned this would increase the risk of failure.

• Fee increases.

• Reduction of services. "Council needs to sit down and talk about this," said Burns. "That's probably depressing enough for anyone."

The town's financial crisis, outlined by Perth treasurer Brian Burns on May 10, will be followed up in part two, as council debates its options.