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No tax increase

THUNDER BAY -- City council will not be raising taxes to control budget overruns.
City manager Tim Commisso speaks during Monday's city council meeting. (Matt Vis,

THUNDER BAY -- City council will not be raising taxes to control budget overruns.

Instead, council on Monday voted to implement restraint measures and to withdraw as necessary from the city’s stabilization reserve fund rather than impose a proposed one per cent increase to the tax levy.

As of March 31, city administration was projecting more than $5.7 million in excessive spending for this year and a net budget overrun of a little more than $3.2 million.

Many councillors said they did not see the point of raising the tax levy when the reserve fund was established for a such a purpose.

Coun. Larry Hebert was one of the first to express opposition to any increase in taxes.

“In my view, reserve funds are rainy day, or in our case, snowy day funds,” Hebert said. “I think this is an appropriate time to use reserves.”

City manager Tim Commisso told council chambers this was the first time in his career he had to present a report showing such a serious overrun report so soon after a budget was ratified.

It was an “unprecedented” situation, he said.

It was also said to be an “unprecedented” winter that led to the infrastructure and operations department exceeding its budgeted snow allotment by more than $3.3 million.

Commisso said the past two seasons are an indication that the amount set aside to deal with winter conditions needs to be increased beyond the current five-year average formula, even if it means they overestimate.

“We may very well bump that budget up and have an easy winter and we have a surplus that gets transferred back into the stabilization fund. It’s kind of like a vicious circle,” Commisso said.

“I think what we realized is that it was two bad years in a row, we need to bump that number up.”

Council voted by a 9-2 margin in favour of rejecting the tax levy increase, with Coun. Iain Angus and Paul Pugh the dissenting votes.

Both had concerns about drawing from the reserve fund for a second year in a row and said it would end up costing taxpayers eventually anyway.

“Will we just be putting off the inevitable?” Angus asked council.

“We pay now or we pay later.”

Pugh said sometimes the right decisions are the hardest to make and said the city needs to find a more long-term solution than reserve funds and temporary spending cuts.

He said he was fearful if the city were to find itself in a similar position in a couple years that nothing would be different, except having a diminished reserve pool to draw from.

“I ask that we not succumb to the temptation to dip into those funds just because it’s unpopular,” Pugh said.

The city ended the 2013 year with an unfavourable variance of $8.2 million, or 4.5 per cent of the net operating budget. For the first time since its creation in 2004, the city had to withdraw from the stabilization fund, to the tune of $6 million.

To attempt to bring this year’s budget back into the black, council passed a host of measures to contain or reduce spending.

Included in the resolution is close to $2.5 million in a deficit management strategy, where different departments found savings from non-essential spending. These included measures such as a hiring freeze on all non-essential positions, reduction of travel budgets and postponing or cancelling some projects and programs.

Council also approved more than $1.6 million in cost containment strategies, including more than $400,000 from the facilities, fleet and transit services department and close to $200,000 in the infrastructure and operations department.

Some, such as Coun. Andrew Foulds, were concerned about the severity of the reductions and said they were worried about eroding the quality of service.

“People are going to feel the impact of this,” Foulds said. “We can sugarcoat this any way we like but it’s putting lipstick on a pig.”

Mayor Keith Hobbs said he would like to see a reduction in the budgets of police, fire and EMS. He said it seems every department except for emergency response continually has their budgets squeezed.

He called the involvement of Thunder Bay Police Service chief J.P. Levesque serving as a vice-president on the Ontario Chiefs of Police and Superior North EMS chief Norm Gale as president of the Ontario Association of Paramedic Chiefs as “luxury” items that result in extra costs.


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