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City to examine revenue tools

Coun. Shelby ch'ng says the city must examine new revenue models, arguing "lower-income earners are subsidizing the lifestyle of wealthy rural Thunder Bay citizens."

THUNDER BAY — The city will take a closer look at how it can fully recover the cost of delivering municipal services to residents, considering revenue possibilities beyond taxation and other new approaches.

The move was framed as an early step in helping the city confront growing service demands and chronic infrastructure funding shortfalls that leaders said increasingly can’t be met with property tax revenues alone.

Coun. Shelby Ch’ng championed the call at a city council meeting on Monday, pointing to data she claimed showed higher-income residents in outlying, rural areas of Thunder Bay are effectively being “subsidized” by lower-income residents in denser, urban areas.

Ch’ng said she’d been inspired to bring the idea forward after attending a recent Strong Towns event where experts discussed the idea that cities often never recoup their costs to service outlying subdivisions, and generate most of their taxes in core areas.

Ch’ng said a 3D map illustrating that dynamic by showing municipal taxes generated by acre “completely blew my mind,” sharing the staff-generated image with council.

The map shows “red spikes” in downtown cores representing significant tax generation, medium to large bars showing healthy tax generation in the rest of the urban area, and only a few sparse bumps of tax revenue generated in outlying areas.

Ch'ng overlaid that with household income data showing an inverse relationship, with the poorest areas in the cores and the wealthiest outside of the urban area.

“I believe there’s significant proof that lower-income earners are subsidizing the lifestyle of wealthy rural Thunder Bay citizens,” she said. “Our financial system, as dictated to us by the province, is antiquated.”

While most councillors took Ch’ng’s point, some objected to her rhetoric.

“I’m fully supportive of this — [but] the messaging, I’m not comfortable with,” said Coun. Mark Bentz. “This is really a cost recovery exercise, not a class struggle.”

“I’m a little concerned about these broad, sweeping statements like certain tax payers are subsidizing others … I don’t want that political side going into what administrators are being tasked with.”

He added that the concentration of businesses in the downtown cores helped explain part of the discrepancy.

Coun. Kasey Etreni questioned Ch’ng’s narrative.

“I do live on the outskirts of the community, keeping in mind I do not live in the four-minute radius of a fire hall, I do not get bus service, I do not have sidewalks, nor do I have sewer,” she said. “So we do need to keep some of those things in mind when we’re discussing those issues. I don’t have the same services as the people who are in the core of the community, and yet I’m paying taxes.”

“When we start looking at some of those things and breaking those down, we need to be careful — because then I’d be saying things like, ‘I’m supporting those who are taking the bus when I don’t use the bus.’ I wouldn’t go there, I’m just trying to use that as an example.”

Coun. Trevor Giertuga said the discussion was “picking on some of the people in the new subdivisions,” and claimed on the contrary that new development on the outskirts is an important tax revenue source.

Coun. Rajni Agarwal agreed.

“If you look at Mountain Road, Mahoganey, all of those bigger streets, those taxes are well over $10,000 a year, and it’s a 200-foot frontage. That’s a lot of money coming in for someone who doesn’t have a sidewalk, street lights, or even a trail. They get emergency services, and that’s about it.”

During the discussion, Agarwal also appeared to question the desirability of urban infill itself, a core tenet of modern urban planning that’s been largely embraced by city staff as a way to lower municipal service costs and work toward the city’s climate goals.

“Let’s not try to intensify stuff,” she said. “People are not moving to Thunder Bay to live in a condo in downtown south core, or downtown north core. They want the nature, the greenery, the beauty that we have — that’s what we’re selling, Superior by Nature.”

In a memo, Ch’ng wrote she wants to see the city “research and inventory all of the potential municipal mechanisms available to recover costs of services including but not limited to, policy changes, operating practices, service levels and revenue opportunities.”

The third-term councillor sees that as crucial in a time when emergency services spending is eating up a growing chunk of the city’s budget, surpassing 40 per cent this year.

“If we don’t do something now about it, if we don’t get this information and come with bold plans to change our trajectory, we’re going to be selling parks to pay for fire [services],” she said. “I’m not being hyperbolic — this is just the fact and where we’re heading.”

Bentz called the resolution a step in the right direction in addressing chronic municipal infrastructure deficits now estimated to run to $30 million a year.

“We have an infrastructure issue that’s going to be hard to solve. We have to start putting our minds to how we’re going to be paying that $30 million shortfall.”

Administration also supported the resolution, with city manager Norm Gale saying the municipal government struggles to continue to balance its budget without cutting services.

City staff have acknowledged the city’s emergency services spending is growing unsustainably, a trend that continued in 2023.

Without provincial action, Gale called Ch’ng’s resolution one way for the city itself to examine how to respond.

“In my mind, there is no doubt municipalities in Ontario need a new deal,” he said. “We need new ways to generate revenue. The taxation regimen for municipalities … is antiquated and does not support the demands and the services and programs we provide.”

Director of engineering and operations Kayla Dixon detailed how administration would carry out the work.

“What we’d be looking at are ways we can continue to afford to operate, maintain, and renew our infrastructure … and all of the ways that might happen, through user fees, through taxes, through area charges,” said. “And we’ll look to see what other municipalities are doing.”

On a split vote with nine councillors in favour, council endorsed Ch’ng’s call for a report, which is due back to council by Dec. 4.



Ian Kaufman

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