THUNDER BAY – In a budget preview presented to business leaders Thursday, Thunder Bay’s top civil servant said the city will be able to keep tax hikes at a manageable level without cutting services.
Speaking at a Thunder Bay Chamber of Commerce “leaders luncheon,” city manager Norm Gale said administration had successfully met city council’s 2.25 per cent target for tax levy increase in the draft 2022 budget. Administration had recommended a 2.75 per cent target.
“We sharpened our pencils, we went away, and I will confirm we have met the 2.25 per cent target without substantial reductions to services and programs,” he said.
The tax levy increase in the draft budget has typically been whittled down, at least slightly, by city councillors during the weeks-long review process in January and February.
Council last year passed a 1.83 per cent tax levy increase (1.6 per cent after growth), the lowest in a decade.
Gale said the city faces challenges including the pandemic, inflation, and a large infrastructure deficit.
Inflation pressures are higher for municipalities than for individuals, he said, with the “basket of goods” they purchase becoming more expensive more quickly.
The city is projected to take a $7 million hit from COVID-19 in 2022, he said, expressing his hope the federal and provincial governments would offer support to mitigate those losses, as they did in 2020 and 2021.
That estimate will evolve based on the public health situation, with Gale saying “it’s likely there will be more restrictions coming,” given rising case counts and the discovery of the Omicron variant.
Regardless, COVID expenses won’t directly impact the city’s tax levy, since it plans to cover any pandemic losses from its stabilization reserve fund, which currently sits at $12 million.
Gale previewed figures from the budget that will be presented publicly in early January at the chamber event, which was moved online due to concerns over rising COVID-19 case counts.
Drivers of budget growth include a proposed $1.8 million increase for policing, a $1 million boost in capital infrastructure spending, exploding insurance premiums, and staffing expansions in licensing and enforcement, parks, and Superior North EMS.
Gale said plans to build new infrastructure would put further pressure on the city budget, pointing to a request from police for over $50 million for a new headquarters, construction of a waterfront art gallery, and the demolition and reconstruction of Victoriaville.
On the other hand, Gale said, the 2022 budget will include a one-time increase of $2.8 million to capital funding, due to a surplus from last year.
He also welcomed “significant” provincial investment at the city’s Pioneer Ridge long-term care facility, which he said would be fully-funded by the province and support hiring more staff.
On other issues like funding to tackle guns and gangs and to address homelessness and addiction, Gale said the city needed more support from the province.
