The federal government has approved using $54 million in stimulus
funds to build a new Halifax library—the cost to be split three ways
between the federal, provincial and city governments.
But how will the city come up with its portion of the money?
That question was discussed at Tuesday’s council meeting, and while
no decision has been reached, it appears that council is leaning
towards borrowing against its future gas tax receipts to pay for a
total of about $85 million in stimulus projects (see “Feds stimulate
city’s wish fulfillment,” April 30, and next week’s paper for more on
how stimulus money was doled out in Halifax).
One proposal would see the city borrow $100 million and pay it off
with the next four years of $25 million gas tax receipts. Such a tactic
will require amending the city’s debt policy, but city staff argues
that this is acceptable because interest rates are very low, and
because the city is in a good financial position, having reduced its
1999 debt of $350 million to a present-day $280 million.
Council will likely discuss funding for the library this Tuesday,
and the debt strategy the week after.
This article appears in Oct 22-28, 2009.
I speak HERESY – HRM should borrow a truck load of money even if they do not need it this year. My educated guess is that interest rates will be going in one direction – UP. HRM debt servicing cost is very low, about 6% of the budget.
Borrow the money, place the cash in the Capital Reserve account as required by legislation, and invest it in short term deposits in the banks until the cash is needed.
In fact, they should have borrowed a truck load 12-24 months ago, although I doubt the province would have allowed them to do so. In 2 years we’ll be looking back and thinking – We should have …..
None of which means I support the new library, I don’t. I do support a new arts centre, something we need far more than another library. I have lost count of the number of libraries available to 340,000 people in HRM.
There’s going to be a surprise on Tuesday…