So what is the city’s debt, actually?
When people think about the city’s debt, they think about the long-term debt – the amount that the city owes. It stood at $28 million as of the end of 2018, and whether it is too much for a city of this size is another debate for another time. The debt is expected to be around $26 million by the end of this year.
The city has been gradually paying down the debt by about $2 million per year the last few years, but they will admit they still have a lot of work remaining.
Net debt is a concept the city talks a lot about as well, which can be summed up as assets versus liabilities. This is a figure that other communities track closely as well. Worth noting is that long-term debt accounts for the bulk of our liabilities.
Estevan’s long-term debt has been trending downward, too, over the last few years, and stood at just under $19 million at the end of last year.
If the objective is to eventually eliminate the long-term debt and the net debt, then it’s likely the net debt that will be eradicated first. As stated before, it’s the long-term debt that residents pay closer attention to.
While we can debate whether $28 million in long-term debt is too much for a city of Estevan’s size to be carrying, or whether it should be reducing the long-term debt by more than $2 million per annum, the bottom line is that it is essential for the city to be working on the debt at this time of uncertainty.
We don’t know what Estevan is going to look like five or 10 years from now, with Unit 4 at the Boundary Dam Power Station to come offline in 2021, Unit 5 to come offline in 2024 and a decision looming on Unit 6 before the end of the next decade. We don’t know how many people will be living here, how high property values will be, or what the tax base will be.
And as we all know, the bulk of the city’s revenues come from property taxes. That’s one thing that will never change for Estevan and virtually every municipality in the province.
If there is to be a reduction in revenues, then the city won’t be able to dedicate as much money to debt repayment as it does now.
After all, this city has other needs. It needs to worry about resurfacing and maintaining roads. It needs to worry about policing. It needs to pay for recreation facilities, cultural amenities and public works. There are capital projects that need to be completed.
In essence, there is a city to run.
This has not been an easy term for city council. They have faced a significant amount of adversity over the past two years, some of it due to decisions it had to make, some of it due to the way it has handled external pressures, and some of it due to situations completely beyond its control, such as the pending retirement of Units 4 and 5.
But the handling of the finances is one thing that has gone right. It’s not all on council; it’s a team effort that city management deserve a lot of credit for. The previous council also has to be lauded for its efforts to bring the debt down.
When you look at where the long-term debt was six years ago, as well as the amount of cash in the bank and the overall financial picture, you see the improvements that have been made.
It’s been quite a few years since the city has been forced to turn to short-term borrowing to pay the bills until property taxes came in. (Yes, that used to be a thing).
Hopefully the city will continue to make progress on debt repayment, while continuing to complete other projects.
