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City of Saint John Releases Sustainability Plan

21-Apr-2020

(Saint John, NB) The City of Saint John released its Sustainability Plan to the public at its meeting of Common Council April 20, 2020.

“The City has been struggling with recurring structural deficits, currently at $10 million and growing, and today we released a thoughtful plan that demonstrates significant and substantial steps to address these ongoing challenges while continuing to deliver quality municipal services on a smaller, affordable budget,” said City Manager John Collin.

The Sustainability Plan proposes a comprehensive approach to solve the $10 million deficit for 2021 and 2022, half of which will be achieved through adjustments to the workforce, and the other half through a series of 22 cost-reduction and revenue-generating measures across the City’s operations.

The new proposed City structure will see departments realigned to place greater emphasis on coordination of services and enhanced customer service improvements, while reducing the overall size of the City’s staff. Under the new structure, and primarily by managing already vacant positions and imposing a two-year wage freeze, the City has identified 5.5 full-time management and professional positions with an anticipated annual wage savings of approximately $912,000; and 9 full-time inside workforce positions (Local 486) with an anticipated annual wage savings of $826,000. Reductions in these positions will be made through attrition and voluntary departures over the course of 2020 and help make up part of the $5 million worth of workforce adjustments. Additional savings will be found through collective bargaining and other workforce reductions as required.

In addition to savings related to the organizational structure, the management team has identified $1 million in such things as re-negotiating supplier contracts, efficiencies in delivering services, and offering expanded in-house training capabilities. The remaining $4 million of the proposed model includes some reductions in services, nominal increases to user fees and changes at some parks and facilities. The full list of proposed changes can be found in the City’s Sustainability Plan, which can be viewed here and which is open for public consultation over the next two weeks.

For more information on the City of Saint John Sustainability Plan, and to offer your feedback before the May 4, 2020 Council vote on the proposed action items to address the deficit, visit www.saintjohn.ca/sustainablesaintjohn. Feedback can be provided to individual Council members, or to the City through an online form on the website or through email to .

In parallel with this work to identify savings, the City participated in an operational audit conducted by Ernst and Young and commissioned by the Province. The audit identified many of the challenges the City has been discussing. It recognizes the tremendous progress made by the City to address its challenges and reinforces the need for further change. The report is supported by City management and formal endorsement from Council will be sought on May 4, 2020.

"Our key focus in reorganizing some of our services is to ensure that we have the strongest alignment possible to support the priorities of Council, position ourselves for growth, and fulfil our ambitious community agenda,” said City Manager Collin. “Our management staff are on board with the changes. They bring tremendous experience, skill and professionalism to their leadership positions, and share a dedication and enthusiasm for collaborative city-building."

Long-term Transformation
The City Manager noted that while the immediate plan addresses the short-term deficit and allows the City to balance the budget for the coming two years, longer-term financial sustainability will require more transformational changes as costs continue to outpace revenues (3% vs 1%).

The Sustainability Plan announced yesterday also details several priority areas that must continue to advance in order for the City of Saint John to realize a long-term path to financial sustainability and remain a strong economic contributor to the provincial economy, a contribution which currently sits at 20-25% of total GDP.  

“We are in a position to act with more certainty and a greater understanding than before. An independent regional analysis commissioned by the Province through Gardner Pinfold has quantified both the cost to the City for being host to heavy industry and the added costs of being a regional hub. This information is crucial to making good evidence-based decisions for the benefit of all stakeholders,” said Collin.

These independent reports indicated that for every 100 employees working in the city limits of Saint John, approximately 40 of them live in communities outside of the City, meaning 15,000 to 18,000 work commuter vehicles enter the City every day and form part of the influx of approximately 33,000 daily non-residents in the City; none of which contribute to the costs required to maintain services and infrastructure. In total, costs required to service residents who live outside Saint John are estimated at $12.3 million annually. This includes $3.7 million in road costs, $1.8 million in parks and recreation costs, and $6.8 million in police, fire, and other costs.

Further, the Gardner Pinfold analysis identified that the City bears the cost of being the Province’s heavy industry base. While job opportunities with industry are highly beneficial for residents across the region, the City alone bears the cost of the increased fire and emergency response risk profiles, wear and tear on the roads from heavy vehicle use, and lost revenue from decreased property values. The independent report estimated these costs to be close to $35 million annually.

Priority areas for long-term sustainability include:

Regional Cost Sharing: To address the financial pressure of being a regional hub, the City is recommending that the Province impose a Regional Levy whereby $8 million annually (phased in over two years) could be provided to Saint John to partially offset the identified $12 million in costs. If approved, all current (albeit limited) regional contributions and all non-resident user fees and differential rates imposed by the City would be cancelled. The Region would then be well positioned to move forward as a region, focused on growth, prosperity and exceptional provision of services to all residents and businesses.

Transfer of Heavy Industry Provincial Property Tax to City: Comprehensive property tax reform promised by the Government for 2022 will address how much tax industry should pay. In the interim and as a trial, the City believes that it should be compensated now for the costs incurred as the host city for most of the provincial heavy industry. The City is not suggesting that industry pay more for this to happen. Rather, the proposal is that the current property tax paid to the province by heavy industry be transferred to Saint John to partially offset the costs. This would be approximately $8-$9 million of revenue transfer for what Gardner Pinfold has identified as a $35 million financial pressure.

During the presentation to Council, City Manager Collin also briefly spoke to three options that have been identified for the future of Saint John Energy and suggested that a task force of all stakeholders be formed to analyze the options and develop recommendations for Council. Decisions regarding how best to leverage Saint John Energy will only be made once an analysis has been completed and recommendations are brought to Council for deliberation. The City expects this type of in-depth analysis could take months to complete. Therefore, on May 4, 2020, Saint John Common Council will only be asked to vote on the staff recommendation to begin analyzing the options (through a task force) for Saint John Energy and return with recommendations to Council at a future date.  

In addition to these immediate priorities, the City will continue to advocate for transformation reforms that are important to the long-term financial success of Saint John and the Region. They include: comprehensive property tax reform, empowering cities to generate revenues, changes to binding arbitration and shared regional services.

“With strong, committed provincial leadership, collaboration from regional partners, and a shared vision for a successful future, I am confident we will achieve transformation reforms and long-term success for our region,” said Collin.

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