Inflationary pressures have ballooned Fredericton’s costs of replacing all outdated infrastructure, also referred to as the infrastructure deficit, to $321.4 million.
The rising cost of goods and services means the city will need to budget more money to replace its infrastructure, which includes maintenance of roads, water and sewer pipes, health care facilities, government buildings, among others.
Water and sewer lines make up $188.1 million of this deficit; roads and streets maintenance carries $69.3 million; government buildings and facilities account for $46.7 million, while machinery’s contribution is at $12.2 million, and vehicles at $5.2 million.
According to the city treasurer, Alicia Keating, inflation has resulted in a delay in infrastructure replacement, causing the city to fall short on its responsibility to replace assets before they become obsolete.
During a council meeting held in March, Keating stated inflation has led to two major impacts: firstly, an increase in the cost of goods and services, and secondly, an inability to invest in infrastructure due to the unaffordability of necessary purchases.
Keating says the current supply chain challenges are causing a decrease in the accessibility of assets for replacement. Consequently, the city is compelled to extend the use of these assets beyond their intended lifespan due to the unavailability of construction firms or the lack of access to them.
“It could impact a service delivery,” says Keating. “So, if a bus breaks down, it can’t go pick up people. If a snow plow breaks down, it can’t plow snow.”
According to Keating, the City of Fredericton usually managed to keep up with its infrastructure deficit by increasing its capital expenses budget by five per cent annually. However, inflation has exceeded this rate over the past year, peaking at eight per cent nationwide in June, before dropping to 5.2 per cent as of February.
In light of this, Keating stated that the city’s staff will review its long-term financial plan and contemplate elevating the percentage of yearly capital expenditure in the future. She added that increasing taxes would be a last resort to find a solution to this situation. Mayor Kate Rogers reiterated this stance on taxes by pointing out other options available for making up for the deficit, such as reconfiguration or reallotment of funds.
