Months after tax hike, Montreal announces $139 million surplus
Just months after the administration of Montreal Mayor Valerie Plante cited $358 million deficit as a reason for tax hikes, the city is now saying it posted a $139.5 million surplus in 2017.
On Friday, officials said the surplus was the result of unexpected revenues such as government injections like money given for cleaning up the old Blue Bonnets site and a booming real estate market.
"The surplus came because there's a big construction boom in Montreal. It could stop this year, we don't know, it's not recurrent money," said executive committee vice-president Sylvain Ouellet. "We also have special money that came from the provincial government, but it's a one-shot deal."
Days after taking office, Plante had said the deficit had come as a surprise and blamed excess spending on the part of her predecessor, Denis Coderre.
Those numbers were early projections and were not based on the hard data that is now available, said Ouellet.
"What we just published, it's not the budget, it's the real stuff, the real revenues and the real expenses," he said. "The surplus came for the 2017 year, but when you make a budget, you're not sure in advance what are your real expenses and your real revenues."
Lionel Perez, interim leader of city hall opposition party Ensemble Montreal, said Plante had been looking at the city’s wish list instead of actual spending when coming up with that $358 million figure.
“She has to own up to it, she has to explain why she intentionally misled the population, or maybe she didn’t understand the concepts,” he said. “Either way, she owes an apology to Montrealers.”
In January, Plante’s administration announced an average tax hike of 3.3 per cent, higher than the inflation rate of 2.1 per cent. During the campaign, Plante had promised not to raise property taxes higher than the inflation rate. At the time of the budget, Plante said she had not broken her promise, saying the reason the hikes exceeded the inflation rate was because of a raise in the water tax.
“Today, we see she had the room to maneuver, the financial margin not to have to increase taxes, yet she did it regardless,” said Perez.
The announcement of the surplus was also met by shock with mayors of some of Montreal's demerged cities. Along with taxes, agglomeration fees - money paid by the demerged cities to Montreal for services such as the fire and police departments, water services and others - were raised by as much as 9.8 per cent.
Montreal-West Mayor Benny Masella, who also leads the Association of Suburban Municipalities, said the swing from deficit to surplus was "a little hard to understand."
"This surplus of $140 million, this doesn't show up in January or February, they knew that was coming," he said. "I know what our budget looks like here, I get updates that say we're on budget, we're behind budget. They had a good idea in November what was going on."
City officials defended the water tax hike, saying the money was needed to invest into crumbling water mains and pipes. They said some of the surplus money will be spent on balancing the 2018 budget and creating a $35 million reserve for snow removal.