Stormy weather ahead for municipal budgets?

• Author: Robinson, David
• Position: Economically Speaking

Last month, the City of Greater Sudbury was $6.1 million over budget on its snowplowing budget. By the end of winter, that number will be over $7 million. That's not a small overrun: we are talking about having under-budgeted by 40 per cent on $17 million.

It could be a fluke. Some years get more snow than others. Maybe there was a surplus the previous year. In fact, there was a $2.9 million deficit last year, too. And the most recent surplus I could find was in 2012. Since that time, Sudbury has under-budgeted for snow removal by more than $18 million. It looks like a job for Sherlock Holmes.

1 ran a simple linear regression that shows an eight-year upward trend in snow removal deficits for the city. The deficit has been rising by $650,000 a year. That is deficits, not spending. The city budget sets its budget for snow clearance to the average of the last five years. That strategy may have worked in the past. It doesn't seem to be working now. Even with a rising budget, the deficit is growing.

Budgeting for snow removal is hard. Mother Nature doesn't tell council in March what she plans to do the following winter. She doesn't say anything about her long-term plans. Scientists, though, have been warning us for more than 20 years that climate change will bring more "extreme weather events." The translation for Northern Ontario is "more big snowstorms and ice storms." For budget planning, the translation is "snow removal costs will be ramping up for years."

There are two lessons here for northern municipalities. First, evidence about global warming suggests we should expect an extra upward trend in certain costs, especially since Northern Ontario is warming faster than the world average, and faster than the Ontario average. Second, at least one city has failed to factor climate change into its budget.

Technically, my regression result is highly significant, but it is based on only eight data points pulled from the local newspaper for one city. There may be other factors at work. Service may have improved, pushing costs up. City council may have been unusually generous to contractors, or contractors and staff may have been unexpectedly more expensive. I don't have the data to check, but I don't have the hard job of setting the budget, either.

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