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Originally Posted by FiveSeven
Does anyone have any insight into how you reply to the 60 million in cuts but spending 275 million on an arena? Assuming the person is completely ignorant of the situation.
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As was said, capital and operating budgets are separate and different. Generally they and the funds cannot be commingled or moved back and forth for a number of reasons. The simplest of these for any organizational budget is the fact that a capital expense is a one time expense while an operational expense is ongoing and likely inflates over time.
For a municipal government it is even more complex as budgets include provincial and federal transfer payments. These transfers have specified budgetary nature either capital or operational.
The capital budget already exists to build replace and fix infrastructure. The operational budget needed to be cut as the ongoing revenue streams cannot support it.
Funny thing, almost all capital projects create additional operational expenses in the future. If you build roads you have to clear, clean and maintain them or if you build a new building you have to cover staffing utilities and maintenance. The event Centre is unique in that once built, the city has no operational costs and net positive revenue. As a capital project it is an operational investment instead of an operational expense.