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Future budget projections 'not sustainable'

Long-term financial overview projects municipal tax levy increases of more than three per cent per year for entirety of council term if status quo continues.
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Mark Bentz
Coun. Mark Bentz, the city's budget chair, speaks during the long-term financial overview meeting on Tuesday, January 8, 2019. (Matt Vis, tbnewswatch.com)

THUNDER BAY – The prospect of projected municipal tax levy increases exceeding three per cent annually for the next four years is concerning to multiple city councillors.

Thunder Bay city council on Tuesday night was presented with the city’s long-term financial overview, the first step in the month-long budget review process.

The overview, which included an outline of this year’s proposed budget that starts with a gross municipal levy increase of 3.25 per cent, also provided a roadmap for fiscal frameworks for the next five years.

That forecast projects a total levy increase of 3.83 per cent in 2020, with the rate gradually lowering to 3.24 per cent by 2023. The 2024 projection of 2.79 per cent would be the only one to go below the three per cent threshold.

The levy is the total amount of money the city would need to collect from the municipal tax base. The levy increase does not reflect the rate of property tax increases.

Coun. Mark Bentz, returning as budget chair after serving in that role during his most recent term on council that ended in 2014, said the future levy increase will outstrip the consumer price index.

The projections, when compounded, represent an 18 per cent increase over five years, Bentz said.

“At some point the lines diverge and it’s not become sustainable to continually outpace CPI on a continuous basis, which we have been doing,” Bentz said. “It’s not sustainable because at some point you’re going to be taxing more than people make, if you were to project this out over many, many years.”

The 2018 BMA Municipal Study found that the average single family detached bungalow in Thunder Bay paid $3,752 in municipal tax. While that was higher than the overall Ontario average of $3,397, it was lower than the average of provincial municipalities with a population greater than 100,000 of $3,963.

As well, in Thunder Bay, the average property taxes as a percentage of income is 3.9 per cent. That rate places the city 62nd highest of 108 Ontario municipalities but third lowest when it comes to the 26 larger cities.

City manager Norm Gale had earlier said the reason council is shown the future years projections is to provide a picture of what could come down the line if the budget remains status quo.

“Those are not certain numbers,” Gale said. “Those numbers are based on everything staying the same as it were today, without intervention by either administration, by government or by council itself. It’s if everything stayed the same. We know good or bad, that’s not going to happen.”

Gale said tying the rate of municipal tax levy increases to the consumer price index, as Bentz had suggested, would mean the city would have to cut services, staffing or operations.

This year’s preliminary budget, which has a total levy increase of $6.2 million to bring the tax base contribution to $195.9 million, represents a midline, Gale insisted.

“The (2019) budget that we’re presenting represents no substantial cuts to services with a slight increase in capital and also net zero increases to departments with specific exceptions – police, EMS, roads for example,” Gale said.

The last approved city budget to come in with a total levy increase of less than three per cent was in 2013, when that year’s budget was passed with a 2.6 per cent hike.

Coun. Rebecca Johnson urged council to set a path forward.

“I can’t support a 3.83 per cent increase. That’s way beyond what I would ever go to,” Johnson said. “I don’t know if the rest of council is but I guess we need to at some point in time have a discussion as to what is acceptable from this council so we can give some direction to administration as to where we’re going to go for the next five years.

“If this council is going to 3.83, we’re going to have some really controversial and exciting discussions.”



Matt Vis

About the Author: Matt Vis

Born and raised in Thunder Bay, Matt is honoured to tell the stories of his hometown.
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