The prospect of a recession hasn’t dampened the city of Montreal’s spending plans.
Investment
Montreal’s 2023 budget: City’s debt and long-term investment are rising
While the current year’s capital spending plan called for 70.3 per cent of long-term investments to be aimed at maintaining existing infrastructure and installations rather than developing new projects, the proportion is diminished to 68 per cent in the new 10-year capital spending plan. That means nearly one-third of the $22 billion planned as investments over the next decade are for building projects.
Using the analogy of a house, the city operating budget is like a bank account that’s used to pay for groceries and other day-to-day expenses. The capital spending plan is a wish list of expensive long-term projects, like repairing the roof, which are financed largely through long-term borrowing.
Some of the investments in the 2023-2032 capital spending plan
- $3.77 billion for repair of roads and sidewalks, including $880.6 million destined for a program that puts a layer of asphalt on roads that are in bad shape while they await major repair.
- $747.3 million to be spent on upgrading the city’s technology platforms, including digital technology at the municipal courthouse and a new communication platform for citizens.
- $682.2 million to replace the incinerator at the island’s only water treatment facility, the Jean-R.-Marcotte plant in Rivière-des-Prairies; $461.2 million to continue a project to build an ozonation unit to disinfect water at the used-water treatment plant.
- $507.1 million on bike paths, which includes $300 million to develop paths in the express bike network, known in French as REV, and $100 million to maintain existing bike paths.
- $120.4 million for real-estate acquisitions to build social and community housing; $480 million for acquisitions to build affordable housing.
- $413.4 million for aquatic installations.
- $171.8 million to maintain sports installations.
- $434.2 million for the long-promised Cavendish extension.
- $132.3 million to redo Jean-Talon St. E. in St-Léonard.
- $451.5 million to continue the renovation of Ste-Catherine St. downtown; $40.4 million to redo Peel St.; $70 million for continuing work on Pine Ave.
- $409.6 million to improve Montreal’s library network.
- $287.8 million for the city’s plans to build “eco-neighbourhoods,” including the Blue Bonnets-Hippodrome site near Jean-Talon St. W. and Décarie Blvd. ($156.6 million), de Louvain St. E. next to Christophe-Colomb Ave. ($67.2 million) and Lachine-Est ($64 million).
- $270.3 million on natural habitats on the island; $406.5 million for large parks, including Jarry Park.
- $264.3 million to repair the properties of Montreal’s police department and fire department.
- $162.9 million to renovate Jean-Drapeau Park, including the aquatic centre.
The city anticipates $2.35 billion in gross expenditures on capital works projects in 2023, and borrowing of $1.13 billion.
As of this year, Montreal’s gross debt, including for the Société de transport de Montréal, is above $16 billion, which is double what it was in the first year of the municipal mergers in 2002. The STM has driven most of that increase.
While the opposition at city hall and the mayors of the island’s demerged suburbs have criticized the Plante administration for increasing the city’s debt, credit rating agencies have said they’re allayed by the province’s willingness to provide financial aid to the city.
Nevertheless, the agencies keep an eye on Montreal’s debt-to-revenue ratio. Montreal had a long-standing benchmark of 100 per cent, meaning the city’s net debt never exceeded its annual revenue. The Plante administration sought city council’s approval two years ago to temporarily go to 120 per cent.
The new capital works plan says the city’s net debt-to-revenue ratio will hit 111 per cent in 2022, below the new temporary ceiling of 120 per cent — largely because the city says investment slowed during the COVID-19 pandemic. However, the debt-to-revenue ratio is expected to hit 115 per cent in 2023, it says. It was 114 per cent in 2021.
The document says the city is still promising to return to a 100-per-cent net debt-to-revenue ratio in 2027.
Montreal’s credit rating influences the interest rate that lenders will charge the city on the billions of dollars it borrows for its infrastructure projects.
City administrations never spend all of their planned capital investments and have long promised to step up the pace.
The value of annual capital investments nearly doubled from 2015 to 2019, from $960 million to $1.8 billion, the latest capital plan says. However, investment slowed in 2020 and 2021 because of the pandemic, it says, adding that projects were either delayed or their start was postponed. The document says the rate of investment in 2022 should reach pre-pandemic levels.
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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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