A Moment with the Mayor: Understanding Municipal Debt
The word "debt" can take on different meanings. It might reflect gratitude, a sense of obligation, or the simple acknowledgment of "I owe you." When we talk about debt at the municipal, provincial, or federal level, however, we’re referring to money that has been borrowed and must be repaid with interest.
For municipalities, funding major projects like buildings, infrastructure, and equipment can come from a variety of sources: taxes, government grants, municipal reserves (savings), or borrowing. Often, it’s a combination of these. Strict rules govern how municipalities can use debt. For example, borrowing cannot be used for day-to-day operations or to pay off existing debt. In addition, provincial legislation sets a borrowing limit based on a municipality’s revenue. Here in Lloydminster, we’ve adopted a policy that caps our borrowing at 75 per cent of the provincial limit, as outlined in Section 6.1 of Policy 134-07 Debt Management for Capital Expenditures (last amended August 22, 2022). This ensures we stay well within a manageable level.
Many residents have asked about the City’s debt—why it’s necessary and how it’s handled. Debt is a tool that allows us to invest in essential infrastructure and services without placing the entire financial burden on current taxpayers. Projects like water and sewer replacements, the wastewater treatment facility, and Cenovus Energy Hub are examples of investments made possible, in part, by borrowing. Some projects, like Servus Sports Centre, were funded through cash reserves, grants, and community donations. While paying for everything upfront might seem ideal, it would slow down progress and limit our ability to meet the needs of our growing community.
Before borrowing for a project, the City follows a careful process. This includes drafting a borrowing bylaw, providing public notice, and ensuring residents understand the purpose, terms, and timeline of the loan. Only after this process—and with approval from the City Council—can borrowing move forward.
Since 2015, several important projects have been completed using public debt. These include upgrades to water and sewer systems, improvements to the outdoor pool, construction of the City Operations Centre, the RCMP building, the wastewater treatment facility, Fire Station No. 1, and Cenovus Energy Hub. Loan terms for these projects typically range from 10 to 30 years, ensuring repayment is manageable over time.
For more information about the City’s financial management and debt, visit Lloydminster.ca/Finance.
Mayor Gerald S. Aalbers
City of Lloydminster
A Moment with the Mayor is a weekly column from the Office of the Mayor and Councillors. Articles are typically published on Tuesdays from January through June and again from September through December. For the complete back catalogue, visit Lloydminster.ca/mayors-moment.
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