THUNDER BAY – City council unanimously approved a target of 3.8 per cent for the 2025 municipal tax-levy increase at Monday’s meeting.
The 3.8-per-cent tax-levy hike would be before growth is factored in.
During the meeting, city manager John Collin said administration is not yet sure how they will achieve this budget.
“What I do know is what we have before you this evening, we believe is achievable based on our rough calculations and the approaches that we plan on taking.
“I will tell you again up front, our recommendations this evening will not lead to major changes or decreases to services that are provided to the community.”
Collin said the elimination of services is not contemplated as a possible approach to achieve city administration’s numbers, but service reductions might be considered as a last resort.
“Approximately a month and a half ago, I mentioned to you that our preliminary look at the budget figures for 2025 would cause us to have to incur a six to eight per cent increase in our tax rates in order to satisfy all of the budgetary credits.
“Clearly, that's an unacceptably high number and therefore, we asked for some time to go back and see what we could do in order to address and reduce that number.”
Collin said overall the city’s financial situation is ‘good.’
“Our SMP rating at AA plus is a significant accomplishment, but it is at risk of deteriorating if we do not pay attention to what lies before us.”
Collin said having tax increases that are significantly above CPI on a regular recurring basis is ill advised, and we are in a “fork in the road.”
“If we go down the fork that we've been on for the last two years and have significant raises to our tax rates, then we are setting ourselves up to have a financial situation overall that is far less good a few years from now.
“If we take the other fork in the road and tighten our belts just a little bit now, then we can achieve a much more sustainable path as we move forward.”
When city administration develops budgets, they consider three basic principles – sustainability, affordability, and flexibility, Collin said.
City treasure Keri Greaves presented a slideshow with information pertaining to the budget direction.
“Earlier this year, council was presented with phase two of the asset management plan that indicated a $31.9 million annual infrastructure deficit. $1.5 billion of the worth of these assets are in poor or very poor condition.
“The 1.5 billion is the replacement value of the assets, not the value of repairs and rehabilitation to bring the assets to a higher level.”
Greaves used an example of owning a home.
“If you own a home, you'll have to replace your roof, your furnace, windows, doors and appliances.
“If you recaulk the windows, you can get a few more years out of them. You plan your budget so that you have funds available when you need them.
“This is the type of planning that is being done by the administration right now,” he said.
The average tax-levy increase over the past 10 years has been 3.5 per cent before growth compared to the average annual CPI of 2.6 per cent, Greaves said.
The city will also be taking a novel approach to the revenue generated by growth in the tax base.
With council's approval, administration will bring forward a draft growth assessment policy and outline how growth could be invested for more growth.
“I thank you for this. I'm here to support it. This is a great rate and a very strong message,” Coun. Rajni Agarwal said after the presentation.
“I don't want to leave this meeting with the community thinking that we're going to come in with 3.8,” Coun. Brian Hamilton said.
“We're targeting the 3.8 on the city side. There's still outside boards, who still have yet to come back to us and then there might even be service reductions that may be recommended to achieve the 3.8.
“Lots of work to be done. I'm happy with those things to give the direction today,” Hamilton said.
