Provincial aid package 'scares the bejesus' out of Saint John's finance chair

The chair of Saint John's finance committee warns a $22 million provincial rescue package for the city is "ripe" with risk.

Coun. David Merrithew said the deal, which is contingent in part on minimizing front-line service cuts "scares the bejesus out of me."

Over the months leading up to the city's approval of its 2018 budget, Merrithew's committee hashed out a series of measures to reduce costs and deal with what is being called a "structural deficit," which are mostly rising labour costs he believes have put the city in a long term financial crisis.

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New Brunswick Premier Brian Gallant announced the aid package Friday, which was unanimously approved by council on Monday night without being made public.

It is described as a financial assistance package of up to $22.8 million over the next three years, with a goal of eliminating "Saint John's structural deficit through growth as quickly as possible."

I think perhaps some folks could have underestimated how painful making those cuts would have been. So I'm thankful for a bit of breathing room.-Don Darling, mayor of Saint John

While voting in favour of the deal, Merrithew said by putting the brakes on front-line cuts the aid package could backfire and actually undo the project of fixing the city's financial situation.

"We went forward [with the 2018 budget] knowing that … there were some crucial things that we must do to alleviate that deficit," said Merrithew.

"Front-line services, it's basically wages and benefits they're talking about, makes up the biggest part of our structural deficit."

The budget included a $2.5 million cut to protective services, police and fire departments.

A jump in property tax

If the city does not get control of its labour costs, Merrithew said it will be faced with a hefty increase to the property tax rate in 2021, when the aid package expires.

Saint John Mayor Don Darling said the package gives the city room to pursue a growth agenda, aimed at increasing the population and tax base.

"I think perhaps some folks could have underestimated how painful making those cuts would have been," said Darling. "So I'm thankful for a bit of breathing room.

"We have to get the best working group together possible, get into those meetings with government and look for the long- term sustainable changes that we need here for Saint John."

Coun. Donna Reardon and Coun. John MacKenzie said the package shows the province is aware of Saint John's difficult financial situation and may now be willing to consider such things as property tax reform or amalgamation of the city with surrounding municipalities.

"The money is one thing but it's the opportunity to be at the table," said Reardon.