City Treasurer Lorella Hayes outlined the implications of debt financing at Tuesday’s finance committee meeting. The city could borrow as much as $84 million, she said, but that would mean annual repayment costs of $6.7 million a year, equivalent to a three-per-cent tax hike.
Ward 11 Coun. Terry Kett warned against adopting a “Greek” fiscal policy, a reference to that country’s massive public debt crisis.
“We have to be very, very careful with debt (unless) you want to increase taxes for the next 20 years,” Kett said.
At one time, the former Region of Sudbury had to dedicate a large part of its budget to pay debt, he warned, and it has taken decades to get the debt down to $38 million, where it stands today.
But Hayes said interest rates are at historic lows, and staff would like to give options on borrowing smaller amounts. For example, borrowing $9 million would be financed by a 0.3 per cent tax hike, or 0.5 per cent for a $15 million debt.
After voting no at finance in the morning, city councillors approved the proposal in the afternoon vote.