THUNDER BAY – City council looked to limit 2021 tax hikes Monday, directing administration to hold an increase to the total tax levy to two per cent as it works to prepare next year’s draft budget.
Projections from city administration estimate COVID-19 will add $8.4 million to the budget in 2021.
A report from city treasurer Linda Evans estimated the city would need to find $5 million in savings and raise its tax levy by 3.45 per cent in 2021 to make up for the impact of COVID-19 – stemming from increased staffing, cleaning, and PPE costs and depressed transit, recreation, and culture revenues.
Some councillors argued a 3.45 per cent levy increase would be too high for residents to bear, particularly during a time of economic uncertainty.
Coun. Rebecca Johnson successfully moved to set the target for the levy increase at two per cent, excluding costs from COVID-19. Those will still need to be addressed, but councillors argued the one-time costs of a pandemic should not be built in to the municipal budget.
Two per cent is likely the target the city would have recommended had it not been for COVID-19, Evans told councillors.
The city is likely to use its stabilization reserve fund – sitting at over $12 million – to cover at least some of the COVID-19 losses.
Individual tax rates do not correspond directly to the tax levy, which represents all the taxation the city collects from residential and other sources. Individual tax rates are influenced by MPAC assessments and other factors, as well as the increase to the levy.
Councillors will receive a third-quarter financial update near the end of October that Evans said would provide a clearer picture for 2021, including a glimpse at usage rates at reopened facilities and cost updates on COVID-19 accommodations.
City administration will bring a proposed 2021 budget to council in December, with council expected to set a final version of the document in February after public consultation and several nights of discussion.