'Not sustainable': Newmarket feeling pinch of declined construction

Town building department projected to go into deficit next year

Newmarkettoday.ca
Oct. 24, 2023
Joseph Quigley

Newmarket's budget is getting stung by declining construction activity as the town’s building department projects an $892,092 deficit and drained reserve next year.

The town plans to draw from reserves to cover the expected shortfall, allowing it to fulfill the department’s operating costs of nearly $2.3 million in 2024. But staff report that could put the reserve in a deficit position next year. Town committee of the whole reviewed the preliminary capital budget Oct. 23.

Newmarket Mayor John Taylor said it is a challenge for all municipalities in the GTA.

The situation “would seem to suggest we’re not collecting what we need to,” Taylor said. “Whether that’s due to building activity, fee level, or both, it’s not sustainable.”

Construction costs soared over the pandemic, impacting building activity.

Treasurer Mike Mayes said the reserve allows them to weather poorer construction years, but the pandemic has drawn that out.

“It is a cyclical business, and we’re just in the downside of it ... most of the province of Ontario is in a little bit of a downturn," he said. “The pandemic has extended that downturn a little bit longer than anticipated … We do know we have substantial reserves in other areas to cover the shortfall.”

The town is also beginning to see impacts from Bill 23, Newmarket Mayor John Taylor said, which reduced development charges municipalities can collect from developers.

Development and infrastructure commissioner Peter Noehammer said the building department is undergoing a review of its fees, with a consultant working on a report with recommendations as to what the town might adjust.

Council tentatively passed the capital and rate-supported operating budgets to be presented in the final budget, expected to come forward Dec. 4.

The budget presentation also highlighted the projected water bill increases for next year. Based on 200 cubic metres of water usage, Newmarket taxpayers could see a $48 increase in their annual water bills next year. After council opted to address a significant infrastructure funding shortfall due to inflation over three years, it is projected taxpayers will also see an average annual increase of $125 on stormwater bills next year.