Paving roads with debt not so bad

Debt.

It is often viewed as an ugly word. It inspires anxiety and fear for the future. It can get viewed as failing to uphold responsibility. It is a spectre hanging in the halls of every level of government. It is a stamp political cartoonists keep on their desks at all times, when they are out of ideas.

The County of Haliburton is considering taking on $3 million in debt to improve its roads situation. Roads are a critical county responsibility, but one can argue the move is not strictly necessary. County staff argued it stands to significantly improve the road network, particularly on the worse roads to traverse in the spring.

Although some may protest, the county is well-positioned to do this. In this context, this $3 million debt could stand to be a positive thing.

Few things earn more ire than bad roads. Just about everyone in Haliburton probably experienced some of the roads which “blew up” in the spring, as director of public works Craig Douglas put it. Several roads we can recall were unsafe or felt damaging to our vehicles. Few would question our local municipalities putting an extra priority on fixing up roads.

But given how much road rural municipalities have to cover, that is always an uphill battle. Costs get high quickly and municipalities have to find money somewhere.

One option is to increase tax rates, which is never popular – big ones especially so. The tax increases needed to fund $3 million would probably make the 2020 budget deeply unpopular and more than people could bear in a one-year span.

There is always the option to make cuts, or “find efficiencies” as the province likes to say. Those certainly are not popular, either. Municipalities cannot run deficits and although there is always spending you can point to as wasteful, finding $3 million to cut out of a budget is no small task. It would probably stand to hurt other important services.

There is grant funding, which all municipalities use to make projects happen. But that is always uncertain and never seems to amount to enough. Ironically, taking on debt could attract more grant dollars, by making the county seem poorer.

So, if the county wants to do more for roads in the short-term, debt is the only other option. In the long-run, it is naturally the most expensive option with interest charges. Given that, it should be used sparingly, which the county has fortunately done. The county has only approximately $1.5 million in debt it is paying off, currently amounting to an annual payment of $157,712.

The county is well short of its annual debt repayment limit of $3.3 million. At current interest rates, taking on $3 million in debt would amount to a total interest payment of about $184,215 over five years, based on figures from a county finance report.

Some will scoff at that. But given how little the county pays to service debt currently, it is far from unreasonable.

The county is not close to a final decision on this loan. Council members will secondguess it, as they should do. Debt should not be taken lightly. Were the county more prone to taking on debt, this move would probably make little sense. Better long-term planning is a stronger alternative than debt, but more is already being mandated to help, such as asset management plans.

In the meantime, this is debt we can live with.

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