THUNDER BAY — If council approves the city operating budget as-is, the total increase in municipal taxes raised will be 4.5 per cent.
The city will collect $241.7 million in taxes this year, $10.4 million more than last year, unless changes are made to the budget that is now before council. That includes both operating and capital budgets as well as a new assessment growth reserve fund.
Not including the growth fund, the city would be looking at a tax levy increase of 3.77 per cent, said Keri Greaves commissioner of corporate services and city treasurer.
A 4.5 per cent increase in the taxes collected by the city does not mean tax rates will go up by that amount. Tax rates are determined later in the year and assuming there is any growth in the tax base, the increase seen by tax payers will be lower.
In past years, the city has talked about tax levy increases before and after growth, but this year they are moving away from that conversation, explains Greaves.
“There is another layer to that conversation,” said Greaves. “Yes, the $241.7 million that we are going to raise in 2025 is 4.5 per cent higher than the $231.3 million dollar budget from last year, but there's another step.”
There were two components to council’s direction in drafting this year's budget, said Greaves. A 3.8 per cent cap on municipal spending increases and the creation of a new assessment growth reserve fund.
The proposed operating budget shows a value of $1.7 million dollars for assessment growth for 2025, which would be collected by the city and invested to spur more growth.
“It's really a different discussion than it was in previous years," said Greaves. “Where the amount of growth was translated into a lower tax rate, a lower perceived tax rate. That's why we're trying to get away from the before and after growth debate.”
“The direction that administration has recommended to council and council supported through the budget mandate is that we need to start investing in growth and we need the growth revenues to help us fund various initiatives and growth-related activities in the city so that we can generate more growth."
"Right now our growth is not keeping up with inflation. So the focus here is trying to come up with ways to drive up that growth.
“If there was zero per cent growth, there would be no transfer to the assessment reserve fund. So in essence it's the assessment growth that we are gaining,” said Greaves.
The city is not including the assessment growth revenue and the activities it will fund in calculating its 3.7 per cent increase in the operating budget increase because it is new and does not relate to existing city services, said Greaves.
“The investment of the assessment growth is really a separate decision that council will be making,” said Greaves.
“The focus here is trying to come up with ways to drive up that growth. So instead of being 0.7 per cent growth, you want to get to 1 (per cent) to potentially even 3 per cent growth.
“And if we can achieve that, then that opens up a lot more doors for council so they can decide if they want to use some of that growth to reduce taxes, they may want to use some of that growth to start working through the capital infrastructure gap that we have, and a portion of that could be used to to generate more growth.
“Really it's a bit of a change of philosophy that we have recommended to council and again council was supportive of it through budget directions.”
