- Municipal Council
- Chronique du maire
You hear a lot about government debt and public finance these days. And that’s a good thing. When a city, province or entire country racks up deficits and significantly adds to its debt load, it is doing nothing less than limiting the financial manoeuvring room of future generations.
Under Quebec law, a city cannot run a deficit. Its annual budget must be balanced. However, when a city invests in infrastructures like streets, sewers and municipal buildings, it is allowed to take out loans. Because of the sums involved, borrowing is often unavoidable and is even desirable for some expenditures, such as streets and sewers, which will serve not only the current generation but also generations to come, whence the idea of spreading the burden over 20 or 25 years.
Recently, in an open letter, a citizen wrote that Town of Mount Royal’s debt level was a cause for concern and that all new projects, like a new sports centre, should be rejected due to their impact on the Town’s debt load.
Let’s take a minute to put things in perspective. Mount Royal’s long-term indebtedness is relatively stable, having risen from $25 million to $27 million in the last six years. Note that this was a period during which we both repaid $4.3 million to the city of Montreal for a drinking water debt and invested in new artificial turf soccer fields (nearly $1 million) and the library expansion ($6.5 million).
In practice, however, our debt is constantly decreasing when compared with the Town’s actual value, which has increased steadily and substantially. By comparing the Town’s total debt to its standardized property values, we can see that this ratio has gone from 0.60% in 2008 to 0.42% in 2014. That is one of the lowest debt ratios among the 16 municipalities making up the Urban Agglomeration of Montreal.
We should bear in mind, then, that Town of Mount Royal’s finances are in very good shape and that it is precisely due to our sound and prudent management of public finances that we are able to invest in visionary projects for the future.