After viewing a report Tuesday afternoon which, unchanged, would see taxes increase by 5.03 per cent in 2019, the city’s finance and audit committee has asked staff to prepare options for three and four per cent tax hikes as well.
“It’s a projection,” said Mayor Lyn Hall of the report outlining a five per cent tax hike at the finance and audit committee meeting Tuesday. “… I really like the idea of getting a sliding scale of what it might look like at three, four or five per cent. Then it’s council’s decision to say whether we want to reduce services in a particular area.”
Director of Finance Kris Dalio outlined several areas where the city’s budget is facing upward budget pressure and one of the biggest is the new employer health tax, instituted by the province as it phases out Medical Services Premiums over three years.
“The employer health tax is a 1.95 per cent tax on our gross payroll,” Dalio said. “In 2019, it’s a double-dip year … we will be paying both the tax as well as half of the remaining MSP premiums. The impact across the board is about $1 million.”
The tax is a one-time hit on the city budget.
Snow removal, depending on the weather, of course, is another area that can hit the city budget hard. For the past couple of years, the city has set the snow removal budget at $7 million. However, even without any substantial snowfall yet this winter, the cost, to date, is $8.1 million and is expected to close in on $10 million by year’s end. He said when the city increased the budget to $7 million, it took the increase out of reserves, which were in good shape due to a year without a lot of snow.
“This year has proven to be the exact opposite of that kind of year,” Dalio said. “… The reserve has now been depleted.”
Dalio is recommending increasing the annual snow removal budget to $8.5 million to better reflect actual costs.
Road rehabilitation is another area where change is being recommended.
The city’s 2018 road rehabilitation levy is $5 million. Administration is recommending it be increased to $6 million in 2019. The main reason for this is to include three other recurring annual projects that are part of the road network that have previously been funding through other reserves: bridges; urban lanes; and gravel roads.
“We’ve always had these recurring projects that are funded outside of the road rehabilitation levy,” said Dalio. “If we are telling people what it costs to maintain our roads, we should talk about that whole network.”
Dalio said he is recommending to not increase the General Infrastructure Reinvestment Fund, instituted in 2013 to help pay for infrastructure projects. However, he said council might consider adding an inflationary increase of two per cent.
The five per cent increase will be a tough one for city councillors, who just came off an election campaign where city expenses were an issue, said Coun. Brian Skakun.
“I think it’s going to be a real tough sell,” said Skakun, who asked how the increase could be reduced.
City manager Kathleen Soltis suggested staff could present a range of options for council to consider.
“The high number right after the election is what it is,” said committee chair Coun. Garth Frizzell. “We can’t shy away from it just because it will politically look better to reduce the amount.”
Coun. Murry Krause was in agreement.
“I don’t think we should lowball it,” he said. “Having just gone through the election, I know there will no appetite on behalf on the community to see a decrease in services.”
He pointed out there are other issues that drive up costs for the city.
“It really is about coming in at a reasonable amount,” he said.
Coun. Terri McConnachie said citizens don’t mind paying taxes as long as the money is being managed well.
The city will begin budget deliberations in the new year.