With rate hikes looming, Winnipeg councillors question taking money from water and waste budget

Posted on October 24, 2024 by Peggy

Some Winnipeg city councillors want the city to reconsider taking a dividend worth tens of millions of dollars out of the water and waste department’s budget every year, suggesting the provincial utility regulator should review proposed rate increases.

A City of Winnipeg report on water and sewer rates expected later this year could lead to Winnipeggers paying significantly more for service, as the city looks for ways to pay for a number of big-budget projects.

“There’s $40 million a year that we could be putting toward these water and sewer projects that’s being collected from water and sewer ratepayers,” St. Vital Coun. Brian Mayes, who previously served as chair of the water and waste committee, told reporters at city hall Thursday.

The city takes a percentage of the total revenue from sewer and water rates, which is directed to the city’s general revenue.

Mayes raised a motion Thursday calling for a review of that water and waste dividend, which was eight per cent of the water and waste department’s revenue in 2011 but had climbed to 12 per cent by 2019.

Mayor Scott Gillingham, in his former role as finance chair, lowered it to 11 per cent and planned to phase it out completely, but those plans were put on hold when the COVID-19 pandemic hit.

An aerial photo shows a large industrial facility. — Upgrades to the North End Water Pollution Control Centre are expected to cost $3 billion. (City of Winnipeg)

In 2024, the dividend amounted to $40 million.

Major capital projects on the water and waste department’s agenda include upgrades to the North End Sewage Treatment Plant, currently pegged at $3 billion. The city has yet to find a way to pay for the second phase of the plant upgrades, meant to remove biosolids from waste water — a project initially budgeted at nearly $553 million, but now projected to be closer to $912 million.

It has no plans yet to fund the third and final nutrient removal phase.

Council has set a target date of 2045 to reach its goal of capturing 85 per cent of combined sewer overflows, by replacing the city’s network that combines household waste and storm water with separate systems, at an estimated cost of $2.2 billion. But city staff have maintained that project could take until 2095 without funding from other levels of government.

Phasing out dividend ‘a big pill to swallow’

In his motion, Mayes wrote that the city’s policy requires a review of the dividend every four years, but no review has happened since 2019.

Mayes acknowledges it could take time for the city to phase out the dividend.

“That might be a big pill to swallow in one go around,” he said, but “rather than doing nothing on some of these water and sewer projects because we don’t have the money, let’s remember we got $40 million that’s going into general revenue from water and sewer.”

Transcona Coun. Russ Wyatt supported Mayes’s motion.

The dividend “was a backdoor tax increase,” he said. “Better to be upfront about the challenges facing our city and what our taxes need to be.”

Mayor Scott Gillingham says he’s open to discussing the dividend, but denied there is anything hidden about it.

“We have it in our budget every year,” he said at a news conference.

“We tell people, ‘here’s the percentage and here’s the amount,'” he said. “We don’t keep it secret.”

Wyatt also raised a motion, seconded by Mayes, calling for the provincial government to make city water and sewer rate increases subject to Public Utilities Board approval.

“Based on what’s happening with the North End treatment plant, the escalating cost, the fact that this is going to have a direct impact on the rates, it’s crucial to have an extra layer of accountability,” Wyatt said.

Gillingham said he’s open to the discussion about PUB oversight of city water rates, but his discussions with the province are focused on funding for the North End plant and negotiating a new funding agreement for the city.

Mayes’s motion will go before the water and waste committee at its next meeting. The executive policy committee will debate Wyatt’s motion.

Council approves changes to fire service fees

Also on Thursday, council cast a final vote approving changes to the fees charged for fire responses to vacant buildings.

Last year, the city began charging the owners of vacant buildings for the costs of sending firefighters to battle blazes at their properties.

They issued more than $1.1 million in fees to 43 properties, but stopped issuing new fines earlier this year, after less than $79,000 was collected.

City staff said the high charges may have discouraged some owners from making repairs, and recommended lowering the fees, and introducing a process to waive fees for owners who fix up their properties.

Councillors ended up approving a new set of fees that were lower, but in some cases still more than twice what city staff recommended.

The new fees range from $10,000 for a first fire response at a property up to $50,000 for a fourth or subsequent fire.

The vote passed with all councillors present voting in favour except for Wyatt, who voted against it. Coun. Sherri Rollins was absent.