Despite the economic and political turbulence of 2022, the City of Quebec ended its fiscal year in the green. Profitable investments and an unexpected jump in real estate transfer taxes succeeded in mitigating the impact of inflationary pressures and soaring prices on the municipal budget.
The capital shows a surplus of 65.7 million dollars in a balance sheet which includes revenues of 1.73 billion and expenses of 1.66 billion, up respectively by 6.9% and 6.5% compared to 2021.
The City is pleased to present a surplus at the end of a year marked by several headwinds. War in Ukraine, rising inflation, derailment of supply chains: the context created several pitfalls, but Quebec is pleased not only to have avoided them, but also to have been able to take advantage of them.
“The economic situation has had effects which have affected both unfavorably and favorably the budget”, indicated the director general of the City, Luc Monty. On the one hand, inflation pushed up acquisition costs, particularly fuel, an expense to which Quebec had to allocate $5.6 million more than budgeted.
Notable impact of inflation and rising interest rates: a 25% drop in residential building permits issued in 2022 compared to 2021, a decline offset by a 53% rise in the commercial and industrial sectors which brought the value of permits issued to 1.9 billion.
Winter also played spoilsports in the budget by bringing down 321 cm of snow on Quebec City, more than 30 cm more than the average observed over the last decade. The heavier than usual snowfall imposed additional expenses of 14.5 million, bringing the total cost of snow removal to 81.5 million in 2022.
On the other hand, the successive rise in interest rates has enabled the City to grow a panoply of investments beyond its budgeted expectations. The capital expected returns totaling 12.4 million: it instead collected 31.6 million, an increase of almost 155%.
Real estate transactions, particularly in the commercial sector, have also enabled the City to receive revenue from transfers almost twice as large as expected. Quebec received, in 2022, 70 million in “Welcome taxes”, or 32 million more than budgeted.
Luck also worked in favor of the City. A faster-than-expected rebound in the tourism industry generated an increase in spinoffs of 7.8 million. A delay in the commissioning of the biomethanization center also allowed Quebec to save approximately $10 million.
The City has not slowed down its investments despite the economic vagaries of 2022. Quebec has injected nearly 650 million in this regard, an increase of 38 million compared to the previous year. The City has also, by the band, reduced its debt beyond what it had anticipated in its budget. Net debt now stands at 1.543 billion, down 12 million from 2021.
Despite this good financial performance, some obstacles stand in front of Quebec in 2023. Real estate transfers have already decreased by 30% since the beginning of the year, underlined Luc Monty. The office building vacancy rate climbed for the third consecutive year despite the end of the pandemic to reach 9.6%, a high not seen in the past decade.
If the premises remain vacant, the situation could have an impact on the property assessment and the Town’s revenues. “It could help to cap the value, or even to reduce it,” notes the CEO.
Bruno Marchand’s administration is pleased with the “excellent bulletin” presented for 2022, but remains cautious for the coming year. The mayor refuses to advance on the tax account that will await the population. “It would be a drunken promise,” the mayor said, due to the uncertainty that remains.