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City projects 6% tax hike in 2024

A 2024 budget directions report released by the City of Thunder Bay projects the city will need to hike the tax levy by over 6% and increase user fees by at least 5%.
Thunder Bay City Hall
Thunder Bay's city council will consider recommended direction for the 2024 budget on Monday. (File photo)

THUNDER BAY — A recommended blueprint for the 2024 city budget suggests significant tax and user fee hikes will be necessary to contain rising costs without cuts to services.

A budget direction report that will be considered by city council on Monday proposes targeting a tax levy hike of up to 6.6 per cent, or 6 per cent after growth in the draft 2024 budget, as well as user fee increases of at least five per cent.

Those targets, which council could choose to modify on Monday, will guide the draft budget prepared by city staff, setting the starting point for council debate over the budget early in the new year.

City council has typically approved tax increases at least slightly lower than those recommended by staff.  

In 2023, administration released a draft budget featuring a 6.2 per cent tax increase, while council ultimately approved a five per cent hike.

The targets are well above increases seen over the past 10 years, when the average tax levy hike was 3.2 per cent, or 2.5 per cent after growth.

The largest increase during that period was a hike of five per cent (4.4 per cent after growth) this year.

The budget directions report tacitly acknowledges that council appears unlikely to carry out most of the $1.5 million in service cuts it voted for earlier this year.

Council has approved around $500,000 in cuts so far, with casualties including the sister cities program, movie nights, and a reduced playgrounds program.

The rest of the programs on the list of proposed cuts, totalling nearly $1 million in spending, are tentatively back in the 2024 budget, though some could be cut after council hears the results of consultations in August.

That spending would amount to just under half a percentage point on the city’s total tax levy of over $220 million.

Administration’s proposed targets for the 2024 budget assume no other new service cuts, said city manager Norm Gale.

To achieve those targets, city departments would be directed to prepare budgets with no increases beyond wages and priorities identified by council.

Among the key factors administration reports are driving higher costs in 2024:

  • Wage and benefit increases
  • Over $5 million to implement a new, provincially-mandated green bin program
  • A projected $1.1-million increase requested by the Thunder Bay Police Service
  • A $1-million increase in city funding of the Thunder Bay District Health Unit, a result of provincial funding formula changes
  • A five per cent increase to tax-supported infrastructure spending, following council policy
  • Increased software subscription fees of $490,000

The proposed budget also makes room for some new projects planned for 2024, including an affordable access pilot for transit and recreation, and implementing the city’s digital strategy.

The city is expected to save nearly a million dollars in 2024 as the province transitions responsibility for recycling to industry. Those savings are estimated to rise to $3 million a year in 2025 with full implementation.

The budget recommendations come amid a fiscal landscape city administration has called deeply challenging, citing factors like inflation and COVID-19 recovery, unsustainable increases to police and other emergency services, miniscule growth in the local tax base, and a “broken” provincial funding formula.

The report notes administration is considering new ideas for cost savings and revenue generation, including introducing development charges, a convenience fee for payments made by credit card, a staff vacation purchase plan, and an internal anti-idling campaign.

The 2024 budget report projects tax increases of 2.86 per cent in 2025 and 4.28 per cent in 2026.

Ian Kaufman

About the Author: Ian Kaufman

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