Bummer caution: If you’re averse to depressing analysis I suggest you skip the following.
The core message in the Town of Hudson’s strategic plan is this: either the municipality incurs more debt to invest in revenue generating projects or risk being trapped in a death spiral of rising costs. A comparison of Hudson’s 2016 budget projections with the numbers contained in this past fall’s strategic plan suggest the beleaguered burg is stumbling into 2016 with the doomsday prophesy already well established.
The current administration announced its intention of initiating a strategic planning process shortly after taking power but it was going on two years before the results were presented to residents. Despite a lot of happy talk about contiguous trail networks, eco-trolleys and waterfront rests and boardwalks, it’s a sobering read, especially the last few pages. “Our do-nothing financial picture is not a good one,” the SP notes. Real costs, including a cumulative shortfall, are up $2.8 million in the last five years. Downloaded expenses for policing, public transit and regional government increase by 6% a year, twice the annual cost of living hike. At that rate, they’ll top $15 million by 2108. The crux of the problem: small towns like Hudson obtain almost all of their revenues from residential taxes. In Hudson, that figure is more than 95%. The struggling commercial core contributes 3.9%; agriculture and undeveloped land are together responsible for one percent.
Meanwhile, the evaluation on an average Hudson home continues to increase. From $450,000 in 2014 it’s expected to top $468,000 in 2016 and near $484,000 in 2017. The portion of the tax bill representing fixed costs is based on valuation. In other words, the more Hudson homes rise in value, the more their owners pay for the Surêté du Québec, public transit and overlapping layers of regional government. Valuations lag real-market prices, which the SP predicts could drop by 6%. According to the worst-case scenario, downloaded costs could increase by 10% annually, dragging the town deep into the red.
We come to local non-discretionary expenses such as infrastructure maintenance and essential services — roads, drinking water and sewers, waste management and fire protection. Then there’s the cost of servicing long-term debt. In Hudson’s case, the cost of interest and principal on the town’s accumulated debt ($32.5M in the SP, $27.3M in the 2016 budget) will average $511 on a $3,753 tax bill. That’s based on a mix of old debt at 3% and new debt at 4%. The SP’s worst-case scenario: a 6% annual increase. The SP included this ominous note: “The interest costs attached to this debt have been minimized through actions taken by the current administration over the past year, so that there is little flex in reducing the interest and repayment costs associated with this debt.”
The SP emphasizes cost-cutting as the primary tool to return Hudson to fiscal probity but I see no evidence of that in next year’s budget. The most glaring example: general administration. The SP supposed the 2016 cost of administering the municipality to be less than $1.5M. Next year’s budget adopted in mid-December — four months after the strategic plan was presented — earmarks more than $2.25M, a million-dollar jump. How about this past year? $1.44M budgeted, $2.06M spent. If this is how the Town of Hudson proposes to control costs, we may as well begin annexation negotiations with our neighbours while we still have room to negotiate.
My wish for 2016: transparency in the town we live in and pay taxes to. That includes posting every document, every presentation and the minutes of every meeting and discussion — both public and private — on the town website. Many of the figures I cite in this post have come from my own notes and documents still not publicly available. This was supposed to be a cleanup administration determined to lift the rock on the sordid past. I have yet to see evidence the coverup has ended.