Sault Ste. Marie Among the Lowest in Ontario for Water Costs

I wanted to spend a little time looking at water and sewer costs in Sault Ste. Marie and how we compare to other municipalities across Ontario and the north. As I’ve written about before, after property taxes, water and sewer costs are the next biggest expense placed on citizens by municipalities and they form part of the municipal burden.

In 2015, City Council reduced the sewer surcharge.  As a result, for residential users the sewer surcharge is, as a percentage of your bill, the lowest it has been in more than 30 years. In order to give residential citizens a further break, the PUC Board (of which I was and am a member) also made the decision to forego increasing water rates in 2016. These actions had the net effect of saving households about $150 a year on average.

The annual BMA municipal study collects and compares data on Ontario municipalities across a number of measures—including water and sewer costs. The 2016 study is now out, and there are some really interesting findings as to how Sault Ste. Marie has been able to improve its water and sewer affordability and cost-competitiveness.

In 2015 Sault Ste. Marie ranked 39th out of 94 surveyed municipalities. In 2016, thanks to the decisions made by City Council and the PUC Board, our rank improved to 6th out of 101. The table below captures some of the relevant changes:

Changes in Residential Water and Sewer Costs / Competitiveness between 2015 and 2016

Year SSM Cost Prov. Avg SSM Rank $ Difference % Difference
2015 $839 $923 39/94 -$84 -9.1%
2016 $685 $976 6/101 -$291 -29.8%

Across Ontario, the average increase in water and sewer charges was just a little under 6% between 2015 and 2016. In Sault Ste. Marie, ours costs went down by over 18%, the sharpest drop of any municipality in the survey. We are now almost $300 lower than the provincial average.

Top 10 municipalities in Ontario for water and sewer costs

By virtue of our actions in 2015, Sault Ste. Marie is now also leading the way amongst the Northern Ontario towns and cities that participate in the study and we are about 33% lower than the Northern Ontario average which is, in real dollars, close to $350.00 below the Northern Ontario average.

Comparison of Northern Ontario municipalities for water and sewer costs.

What becomes striking when you start to delve into the study results is just how uncommon it is for municipalities to be able to reduce their costs year-to-year. Of the 94 municipalities that reported information in 2015, Sault Ste. Marie was one of only three to reduce its water and sewer costs by a more than nominal amount in 2016 (North Bay and St. Catharines were the other two). Even high-growth cities like Toronto and Markham had to put their rates up.

I think that just goes to show that it’s a challenge controlling costs at a municipal government under the best of circumstances. In Sault Ste. Marie, we’ve faced additional challenges over the past several years with a difficult local economy and the non-payment of taxes by a major industrial employer that has negatively affected the City’s cash flow. Despite this, I’m pleased that Council and the PUC have found a way to deliver meaningful savings to citizens also to substantial improve our City’s affordability and cost-competitiveness.

-CP

Decreasing the municipal burden in Sault Ste. Marie

How do you calculate the relative affordability of local government from place-to-place within a province such as Ontario? For residential taxpayers, one of the important measures to look at is something called the “municipal burden.”

While property taxes are the biggest part of the municipal burden, water and sewer costs are also an important part of the equation. When you add together property taxes with water and wastewater costs, you have what is referred to as the “total municipal burden.”

Each year, the BMA Municipal Study collects financial and spending data about a large cross-section of Ontario municipalities. BMA calculates the municipal burden for residential homeowners in each community by taking the average cost of residential taxes and adding the costs to use 200 cubic meters of water annually.

How does Sault Ste. Marie rank?

The 2015 BMA study calculated that Sault Ste. Marie’s total municipal burden was $3,669—$2,830 of that being property taxes and the remaining $839 being water and sewer charges. In absolute dollar terms, we actually trended low for the total burden, ranking 19th lowest out of 98 participating municipalities. The file linked below has the full rankings, sorted by the total burden.

BMA Study, Ontario Municipalities – Total Municipal Burden 2015

The good news is that according to the 2016 BMA study, the total municipal burden in Sault Ste. Marie actually dropped between 2015 and 2016—falling from $3,669 to $3,423. That is the 5th lowest total out of the 102 municipalities that provided data for the 2016 study.

BMA Study, Ontario Municipalities – Total Municipal Burden 2016

Much of the improvement in Sault Ste. Marie’s municipal burden figures from 2015 to 2016 is the result of changes to our water and wastewater rates. Both City Council and the PUC Board took steps late in 2015 to decrease water costs for residents and businesses in Sault Ste. Marie. City Council made the move to decrease the sewer surcharge from 100% to 62% for residential users—bringing it to the lowest level since 1982.

water-costs_2016

The PUC board also did its part to help ratepayers. The board elected to forgo increasing water rates in 2016 and instead opted to keep them at the 2015 level. This was done at a time when many other municipalities were increasing their water rates by as much as 7 per cent.

As a percentage of household income, Sault Ste. Marie’s municipal burden in 2016 stood at 4.2% – the lowest it has been since we began participating in the survey in 2005. The chart below shows the changes since 2009.

muni_burden

When it comes to keeping the cost of local government affordable for residents, property taxes understandably get most of the focus. However, it bears remembering that water and sewer charges are a significant part of the equation as well. I’m pleased that both City Council and the PUC were able to make decisions that have had a positive impact for citizens, the significance of which we are now starting to measure.

–         CP