A new governance model will hopefully mean Muskoka taxpayers will eventually stop subsidizing the airport, say councillors.
At its March 17 meeting, District Council officially approved a recommendation from the District Finance and Corporate Services Committee to create a Muskoka Airport Municipal Services Corporation.
The recommendation included adding an additional $100,000 for the work required to create the Municipal Services Corporation for a total budget of $350,000.
Councillors Guy Burry and Scott Morrison both sit on the District finance committee and hope the new governance model will help move the airport into a more balanced financial position so that it no longer relies on subsidies from Muskoka taxpayers.
Burry says the money the District spends to subsidize the airport is significant. “Part of it is transparent, and part of it is buried in other parts of the budget. So the fleet, the equipment that’s used at the airport, is not in the airport budget; it’s in the fleet budget, so it really does take someone with a significant understanding of how municipal budgeting is put together to understand just how big the subsidy is. It’s about 2 million dollars a year.”
Burry argues that the airport should break even at a minimum. “Airports around the world make money, so my issue is that the District is subsidizing it. So why is that? If you listen to the management of the airport, it’s because they are constrained in their ability to make decisions by having an additional layer of governance of the District Council. So while they have an expert board of the corporation of the airport, all of those decisions need to be remade by the 21 people sitting around the District Council table, which is adding no value, and I would suggest that there are very few around the District table that have any experience running an airport or owning an airport.”
Burry and Morrison have been pushing for a change in the airport’s governance model. They point to more pressing issues that could be addressed with the money spent to subsidize the airport.
“When I found out by how much money we were subsidizing the airport, I was blown away, I had no idea,” said Morrison.
He said the airport generates economic benefits by, for example, leasing hangars and providing employment, but the subsidy is also significant. “If you were to ask the taxpayer where they want their money spent and you gave them an option of subsidizing an airport or providing housing or bringing taxes down, I’m pretty sure I know where the answer would be,” says Morrison.
Bury said a timeline to break even should be established under the new airport governance model. If the airport is still unable to break even, Burry suggests that perhaps it can be leased out to the private sector, with the caveat that the District will continue to own the land. “I would never want to see the District sell the land, but there is no reason that you can’t have someone else run the business.”
The District hired a consultant to help the upper-tier municipality establish an airport Municipal Services Corporation. It is anticipated that one will be in place by June.
You can find the staff report to the finance committee Here and the consultant’s presentation Here.
Related
District to embark on public consultation involving Muskoka Airport
District debates Muskoka Airport governance structure
Proposed changes to airport governance could cost more than $300,000
Don’t miss out on Doppler!
Sign up here to receive our email digest with links to our most recent stories.
Local news in your inbox so you don’t miss anything!
Click here to support local news
Great recommendation by Guy and Scott. Glad that Council has approved this. Many former larger (Pearson, Hamilton) airport Executives and Board members reside in Muskoka and their expertise can be tapped into to turn Muskoka Airport into a money-maker. Airports make money through commercial rent, landing fees, and airport services to name but a few examples.
With less bureaucracy (at the District level) to slow them down, I’m excited to see where Muskoka Airport’s Board takes the airport, for the benefit of all Muskoka residents.
Why is a $2 Million operating deficit not being treated as a financial emergency by Jeff Lehman, Terry Glover and other mayors council members and the staff responsible?
The idea that at some far off date the airport might break even is equally as scary. Bob Young was screaming about the cost of the airport a decade ago.
These are the very same people (staff/council) normalizing the passing of over 10% tax increases, while they get raises for hemorrhaging money.
The fact the District can’t account for the deficit total is reason enough to sell or lease it now.