Fredericton’s $321-million infrastructure deficit grows due to inflation

The City of Fredericton says inflation is causing a delay in replacing aging or already end-of-life infrastructure.

The city underwent a financial audit, and corporate services assistant director Alicia Keating said the city received a clean audit opinion.

“Our infrastructure deficit continues to grow,” she said in a presentation to council Monday night. “Inflation has hit everywhere. That is a large driver into our deficit.”

The city shows an infrastructure deficit totalling about $321.5 million.

“It’s basically just a deficit that we have for future maintenance required to our infrastructure,” she said.

It includes a deficit of $188.1 million for the water and sewer systems, another $69.3 million for roads and streets, $12.2 million for machinery, vehicles and equipment, $46.7 million for buildings and municipal facilities, and $5.2 million for outdoor sports and recreation.

View image in full screen

“The question is, are we investing in our infrastructure at the same rate that we’re using it? And the answer is no,” she said in a presentation to council.

She said it is largely due to inflation. The city does allocate an incremental increase of five per cent each year — or about $800,000.

When asked whether that’s enough, Keating said the city must walk a fine balance in order to keep the tax rate sustainable.

“It’s not only what’s enough, it’s what’s affordable,” she said speaking to reporters. “If we had enough, it would significantly impact our tax rates on our residents so we’re trying to balance everything out and make sure we’re investing in our infrastructure renewal but also keeping our tax rate sustainable.”

The city’s sustainability ratio — calculated by dividing what’s being replaced by what is being used — has steadily declined since 2017 – from 1.02 to 0.48 in 2023. The only year it remained unchanged was between 2020 and 2021.

For Fredericton mayor Kate Rogers it’s not for a lack of trying to keep up.

View image in full screen

“We’ve just seen that even though we are continuing to contribute, it’s just that money is not going as far,” she said speaking to reporters Monday. “That’s essentially what it comes down to.”

She said there are positives out of the audit that show the city is being fiscally responsible, including keeping to a self-imposed debt level of eight per cent — reaching only 3.5 per cent in 2022.

It also has a cash surplus of $1.2 million, which will be carried over into the 2024 budget.

“It is the one area where we know that we have to be very mindful to continue investing,” she said.

Both Rogers and Keating said just because some infrastructure may be a bit past the end of its lifecycle does not mean it is unsafe, adding routine maintenance is a part of all infrastructure that has surpassed its expiry date.

The city plans to look heavily at its capital spending for its long-term budget plans expected this spring.