The city’s budgeting process is moving forward following three days of intense discussions between city council and staff last week.
Senior officials presented departmental budgets, while finance also walked through out a proposed 5.84 per cent tax levy increase as a starting point for discussions on the potential impact to municipal property taxation.
Under the proposed tax levy, the city will raise $32.8 million in property tax revenue.
Staff will reconvene with council for further discussion and decisions on resolutions outlining specific spending requests, as elected officials wrestle with ways to keep the tax hit as low as possible amid soaring inflationary and cost pressures.
The impact on the tax levy increase will be affected by city council’s decisions on those resolutions during the next scheduled budget meeting on Feb. 8. After that, the city will prepare a budget document for public review and feedback.
As households and businesses see increases in everyday costs, so to do city operations, according to Mayor Wayne Price. Keeping tax rates low will be tough, given the current economic challenges, he added.
“The days of keeping the budget under three per cent or whatever the magic number used to be, I don’t think you’re going to see that in any municipality across Canada this year,” Price said.
Some of those challenges include the fiscal impacts of potentially adding staff, such as a request to add two firefighters to Fire and Emergency Services, or additional watch clerks to help ease the RCMP detachment’s administrative burden.
Adding staff to city operations in any capacity is typically (but not always) funded out of revenue, which comes from taxes.
Additionally, some larger capital projects in the five-year forecast may have to be delayed or deferred.
Price also noted his long-term trepidation with the municipal reserve funds, as the city will be drawing more out of those funds than it will put in over the next five years.
“The tough part that I’m concerned about is we’ve been trying to keep the numbers [tax levy increase] down for a number of years and so you draw from reserves … well, the money to support the reserves has to come from somewhere and typically it comes from revenue, and the majority of revenue is taxes,” Price said.
“So we’ve been supplementing our reserves through taxes over the years — and that’s the only way you can — and my biggest concern is, I’m looking at 2027 at the end of the five year cycle, and those reserves, we’re drawing down more than we’re putting in. And that’s council’s big challenge.”
One idea that was floated in discussions was potentially suspending the one per cent dedicated road tax on a temporary basis, just to help reign in the tax levy increase. Suspending the tax would save approximately $300,000. However, the flip side is that it would eliminate the same dollar amount available for the city’s road projects.
Price credited city staff for creating a transparent budgeting process and tightening the fiscal belt.
“Our staff have been extremely diligent over the last number of years; it’s all part of the process,” said Price. “They don’t bring a lot of fluff into the budget, in fact, they don’t bring any fluff into the budget anymore. It’s pretty much necessities, but right now we’ve got to go beyond necessities and go to critical spending, only to try and keep the tax rate down and to try and keep those reserves healthy.”