Municipalities cancel, reduce roadwork as construction prices rise
Bids for Quispamsis road upgrades were at least $1M over budget
Residents of Quispamsis will be feeling inflation not only in the grocery store, but also on the roads in their community.
The town is cancelling its entire street upgrade program this year because the bids for the work were at least $1 million over budget.
"I've been doing this for a little bit more than 36 years and those are the highest incremental increases I've ever seen from year to year," said Gary Losier, director of engineering and public works for the town of Quispamsis.
He said it's not uncommon for roadwork bids to come in higher than expected. A few thousand bucks is no surprise, but a million dollars over, or 40 per cent higher than expected, is another story. Losier said the town usually prepares for bids to be 10 to 15 per cent over budget.
"When you set your budget, you try to do your best to guess," he said. "It just surprised the heck out of us."
The country has seen the highest increase in non-residential construction costs since Statistics Canada started keeping track in 1981. According to the agency, non-residential construction costs increased 12.5 per cent in 2022 compared with 2021. It said the main reason for the increase is rising costs of materials and lack of staff.
Losier said the town will still fix potholes and maintain roads, but the big surface upgrades won't be happening.
He said the roads in the town will be OK for another year without this work. He said they will try again next year when costs have hopefully fallen. And if costs continue to rise, he said the town will budget accordingly.
Andrew Black, the mayor of Tantramar and the president of the Union of the Municipalities of New Brunswick, said it's likely every community in New Brunswick is contending with higher operating costs.
Black said Tantramar council has had to either reduce the scope of the work or look for money elsewhere to cover the higher-than-expected costs.
He said this year, such adjustments have been more frequent than before.
"It has been more complicated," he said.
'Something has to give'
This year and last, the province merged communities and reduced the number of local entities from 340 to 90.
Tantramar is an amalgam of Sackville, Dorchester and three local service districts.
Black said the cost increases are especially challenging because municipalities have limited sources of revenue — mostly from property taxes.
Black said a lot of communities have more areas to serve after amalgamation, and that's making balancing a budget even more challenging.
"Something has to give," he said. "If you have more responsibility as a municipality … and if you only still have the same pot of money to pull from, then you need to make a decision one way or another about what gets done and what doesn't get done."
Black said as part of municipal reform, the province put a cap on property tax increases for people whose area used to be a local service district and not represented by council.
According to the legislation, in order to "eliminate the tax rate differential" between the two areas, "the restructured local government may increase the adjusted rate in a portion of the restructured local government by no more than $0.05 per year for each $100" of assessed value.
The cap expires in 2033.
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