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The city of Montreal ended the year 2022 with a surplus of $343.8 million.
However, the city’s roughly 2 million residents shouldn’t expect to see a cheque in the mail for overpayment of taxes because the surplus has already been earmarked for the 2023 fiscal year.
Montreal published its annual audited financial results on Friday afternoon and the city’s revenues exceeded its expenses, posting one of the highest surpluses in recent years. In 2021, the city posted a surplus of $293.1 million.
About $178.5 million of the surplus comes from the island-wide agglomeration budget, and $49.1 million comes from the borough budgets. The remaining $116.2 million comes from the central city.
The boroughs will get to keep their surpluses, while the surplus for the agglomeration has already been pegged to help defray the cost of deficits within the agglomeration council budgets. The rest will go to pay expenses in 2023, which are likely to be far higher than in previous years because interest-rate hikes will affect the city’s debt financing costs and inflation means the city is paying far more for goods and services than in years past.
Speaking to reporters on Friday, executive committee president Dominique Ollivier said despite the higher-than-expected surplus, the city did not overcharge its residents when it approved its highest tax hike in more than a decade last December.
“Once we replenished our reserves for snow clearing, paid back part of the debt and set aside a bit of money for inflation, there won’t be too much money left, believe me,” Ollivier said.
The city credited the increase to higher-than-expected tax revenue and more government aid than it expected to offset expenses such as those related to the pandemic. The city was under a state of emergency for 150 days during 2022 to respond to the COVID-19 crisis.
The city spent far more than budgeted on overtime payments to police and firefighters, mostly because of their work during the COP15 biodiversity conference last December. Overtime payments to police officers for the conference amounted to $22.5 million. The city spent $30.4 million on the global conference, but received $27.9 million in transfer payments from the federal government to offset the cost.
Overall, the city paid its firefighters $15.4 million more in overtime charges than it budgeted, partly because of a switch to 24-hour schedules and partly because of emergency measures in place for the COVID-19 pandemic.
There was some good news about the city’s debt level. The city’s net debt was reduced to 106 per cent of its revenues, which is less than the 119 per cent forecasted. In fact, the city’s costs of financing its debt made up 13.9 per cent of the overall budget, which is less than the 17 per cent originally predicted.
The city’s net debt was $6.5 billion at the end of 2022, a reduction of $30 million compared with the previous year. Cash payments made throughout the year allowed the city to avoid borrowing about $1.2 billion, according to the document.
The city paid an interest rate of 3.2 per cent on its debt in 2022.
In the last year, interest rates have climbed dramatically, and Ollivier said that will have an effect on the debt and debt financing costs, but it’s too soon to say what effect that will be.
“It’s a bit early at this point to say,” Ollivier said. “At this point, what we can say is that since we have been doing a lot of cash payments on infrastructure, that helps a bit with the debt level.”
Speaking for opposition Ensemble Montréal, Alan DeSousa said the results show the Plante administration has overtaxed Montrealers.
“The hypocrisy of this administration is imposing the highest tax hike in more than a decade when at the same time it posted a surplus of more than a quarter of a billion dollars,” said DeSousa, the party’s spokesperson for finances. “The administration misrepresents its budgetary reality and always raises taxes, rather than managing its own budget properly.”
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