Labrador City 'suffering,' working with bare bones budget

The Town of Labrador City is working with a budget of $2.1 million dollars lessin 2016, and Mayor Karen Oldfordsays it's taken a lot of work to ensure business and propertyowners are protected in these tough financial times.

"It's the economic reality of the situation that we're finding ourselves in. There are a number of projects that we're not going to proceed with, recognizing those economic realities," Oldford told Labrador Morning.

Back in December,the town wasgranted amonth-long extensiontoadopt an operating budget for this year.

Oldford said oil pricesbegan to plummet just after last year's budget was released.

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As a result, council readjusted its budget throughout the year and put a number of projects and positions "on the backburner." The money saved, she said, was then put towards the 2016 budget.

"We certainly are taking in lower revenues. We did readjust the mill rate down, we're trying to ensure residents did not see a tax increase."

Oldford said the town also consulted with the Iron Ore Company of Canada (IOC) to discuss its grant in lieu of taxes.

Because the company is outside the town's boundaries, it is not directly taxed. Instead, the town has a contract which compels IOCto pay an annual grant one that makes up about 35 per cent of the town's annual operating budget.

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"Because the grant is equivalent to 3.5 mills, every business in our community gets the benefit of the reduction of the mill rate because of that grant."

Oldford said that agreement, together with the savings of last year's budget, allowed the town to reduce the mill rate.

The adjusted mill rate, she said, means some residents will see a dip in their property taxes. Those who have added value to their home, however, can expecta slight increase.

Shielding businesses, putting off repairs

The town has implemented an additional 10 per cent reduction for businesses to try to help them through difficult financial times.

"We ... recognized that there are some really tough times here right now and a lot of businesses are suffering," said Oldford.

They're not going to see a huge [mill rate] increase at a time when our community is suffering.- Karen Oldford, Mayor ofLabrador City

The town has also deferred capital projects in an effort to cut costs.

It's delayed equipment purchases and reconstruction plans on roads and storm sewers. But Oldford said this is a short-term solution, as the town's infrastructure is aging and requires regular maintenance.

"For a year, while we're looking at where the markets are, we can postpone this. But if we leave it any longer than that, it certainly could have long-term, greater financial implications for the community. So that's the balancing act that we're in right now."

More cost cutting

She said the town is looking ahead to projects like meeting the federal government's Wastewater Systems Effluent Regulations.

Oldford said this will cost around $30 million and, while the town started saving money two years ago, it won't be able to put money into that fund this year.

"We can't afford to, but yet we know we'll have to meet those targets. And sooner rather than later."

Oldford said over the next six months, the town is reviewing every position and program it offers.

So far, she said, the response from the community has been positive.

"They're pleased that they're not going to see a huge [mill rate] increase at a time when our community is suffering," she said.

"They're also pleased to know that the province has agreed to and is starting with the consultations around looking at the Municipal Assessment Act to see what changes can happen for the future."

"So that communities like ours,and others in the province,aren't getting hit like we are currently when the economic realities change quickly."