We often hear about the Municipal Infrastructure Gap. It comes up a lot during federal and provincial elections.
I recently received this information from the Association of Municipalities of Ontario:
What is the Municipal Infrastructure Gap? Municipalities own nearly half of the public infrastructure in Ontario, more infrastructure than any other order of government in the Province, and spend an average of $3.9 billion per year on capital projects. The 2008 final report of the Provincial-Municipal Fiscal and Service Delivery Review estimated that municipalities need to invest an additional $6 billion a year over 10 years in infrastructure, or approximately an additional $1,203 in property taxes per household, to pay for maintenance and growth. Roads, bridges and transit account for nearly $4 billion per year of the gap.
Average Lifecycle Costs for Roads, Bridges and Bus Transit: The Provincial-Municipal Fiscal and Service Delivery Review estimated average lifecycle costs for municipal infrastructure systems to be:
- Bridges: $263,000/kilometer lifecycle cost
- Rural paved roads: $234,000-$261,000/kilometer depending on type (local-arterial)
- Unpaved: $9,000/kilometer
- Urban roads: $518,000-$604,000/kilometer depending on type (local-arterial)
- Buses: $100,000 for a community bus; $619,440 for a standard bus
Guelph is no different than other municipalities in Ontario. We have our own share of the infrastructure gap.
The City has established debt and reserve management policies to ensure we do not put the City’s long-term financial position at risk as we build new infrastructure and maintain existing infrastructure.
Our staff are developing our first financially-sustainable 10-year capital budget. The capital budget establishes the funding available for capital projects whether they are new projects or maintaining existing infrastructure.
However, this in itself will not fix the infrastructure gap in Guelph. There is simply not enough money in the current municipal system to do that. Some of the immediate questions that Council will need to consider are:
- If we cannot immediately fix the infrastructure gap, how might we ensure it does not get worse over time?
- Can we provide more space within our capital budget for the maintenance of our infrastructure?
- What is the right balance between funding new projects and maintaining our existing infrastructure?
- How might we do business differently so that new capital projects can move forward without making the infrastructure gap worse?
- What does “doing business differently” actually mean? What expectations will need to change?
- What other sources of revenue can we aggressively pursue to expand our capital financing envelop without risking our financial position? (the $48M we received in Infrastructure Stimulus Funding is a great example)