Increased costs and fees — end the dance

There are few people who dispute the need for a $3-billion upgrade to Winnipeg’s North End Sewage Treatment Plant. How and when it should be fully funded, however, has been a source of great uncertainty.

There is near consensus on the size, scope and environmental importance of the project. Massive upgrades to the 88-year-old facility have been contemplated for decades and became a pressing issue in the early 2000s when the aging plant failed and spewed millions of cubic litres of raw sewage into the Red River. Ultimately, the provincial Clean Environment Commission ordered the City of Winnipeg to assemble a plan to replace the plant.

The city responded with a three-phase plan that, in 2005, was pegged at more than $1 billion, a sum that was well beyond the financial capacity of the city and its homeowners to cover on their own. Funding requests were made to both the provincial and federal governments, triggering the first in a series of what we might call the fiscal tango.

It starts with the city releasing trial balloons featuring alarming estimates of the increased cost per home of paying for the upgrade without funding from senior levels of government. After this initial gesture, Ottawa and the province expressed their support but stop short of fully committing to its costs.

From the outset of work on the North End plant, there has been an element of uncertainty about the funding from senior levels of government. Even after the city laid out its plan, provincial and federal officials were circumspect. “Everyone has an opinion on what we should do,” former Coun. Lillian Thomas said in 2005, “but no one is coming to the table to help us.”

In some ways, the reluctance to committ to the dance is understandable: the tripling of the project’s costs are enough to keep almost anyone off the floor.

History will show that federal and provincial governments did, eventually, come to the city’s aid for the first two phases of the NESTP. Over the years, hundreds of millions of dollars have flowed to the city but only in dribs and drabs. Two decades after the first steps were taken in the very first fiscal tango, politicians are still dancing around a commitment to fully fund the project.

As a result, Winnipeg homeowners were threatened, once again, with enormous rate hikes for sewer and water service. Earlier this fall, with federal and provincial funding commitments still unfulfilled, the city warned homeowners they could face, on average, an additional $436 in water and sewer rates in 2026, and another $340 in 2027. This coming on the heels of a $168 hike this past April.

In late October, the city revised its estimate of rate increases to an average of $44 next year and $68 the year after. This adjustment was based on the expectation that a deal with the provincial and federal government for phase three funding would be forthcoming.

However, the fact is that the deal is, remarkably, still not done.

The uncertainty surrounding the funding for these projects is completely needless.

Given the limited sources of revenue available to them, municipalities across Canada are wholly dependent on federal and provincial funding to undertake infrastructure projects that require years or even decades to complete. Full funding commitments can and should be made at the earliest possibility so that homeowners do not have to face the stress of exorbitant increases that might challenge their ability to own a home. And honest and complete project budgets should mean that other levels of government aren’t committing to unexpected and massive increases in spending.

Uncertainty over the impact of large infrastructure projects is not morally or ethically justifiable. The senior levels of government should abandon the fiscal tango and replace it with funding certainty — and budget accuracy.