THUNDER BAY -- A local economics professor suspects part of the proposed tax levy increase is the city playing games.
Lakehead University economics professor Livio Di Matteo said there's no doubt the city's in a tough spot this year with its budget.
A look at net operating costs show an increase of about $7 million, or three per cent over last year, which doesn't seem that bad. But once the city factors in declining assessment, reduced provincial transfers and other costs, it quickly adds up to a proposed 6.3 per cent tax levy increase.
"I think what's particularly interesting is even if you ended up spending the same (as 2014) you'd still have to raise residential property taxes probably a couple of per cent in order just to stay in the same spot," Di Matteo said.
Councillors want to see the number reduced to less than four per cent, which administration has options to do.
Di Matteo speculates that some of that might be strategic thinking.
"If you come out at six per cent it looks like you've done a really good job managing your expenses by getting it down to three or four," he said.
"I think they've done that a number of times and it starts to wear a little thin. Really they should probably deal with the public finance of the city more seriously and not play these types of games where they come out and scare people at six or seven per cent and then wished to be patted on the back for bringing it down to four."
With six full-time equivalent positions in the budget this year Di Matteo said the city could start with a hiring freeze and defer certain capital projects in order to get the levy down.
"But that still doesn't solve the longer-term problem in that you have shortfalls in revenue, a weak economy, particularly on the business side, that is hampering the city's ability to raise the funds to pay for the things it wants to do," he said.
That's why the Thunder Bay Chamber of Commerce has been calling for a core services review at city hall. Executive director Charla Robinson said to see where the city might be able to cut, especially when it offers similar services to the private sector.
"It's the beginning of a long discussion," she said.
"We're not happy with the proposed tax number and we are hopeful that that will come down to a much more reasonable percentage."
Robinson said she understands it's going to be tough to find a balance this year and she's hoping the public speaks up to let council know what they think.
As for shifting the levy onto business, Robinson said around 5.6 per cent of property in the city is considered in that class yet gets 40 per cent of its tax revenue from there.
"We believe that we are paying our fair share," she said.
The chamber is making a deputation to council next week.
"We will continue to work with them to find the right balance," Robinson said.
Poverty Free Thunder Bay chair Terri-Lynne Carter said she does see some positives in the budget for various initiatives and strategies. But the organization doesn't want to see service cuts, especially around child care.
"I think that would be a really big mistake. The marketplace doesn't have the capacity to take on extra children and parents need stability," she said.
