The Halifax Regional Council is considering an eight percent tax increase for homeowners and businesses as the municipality faces “significant economic headwinds” heading into the 2023-24 budget process.
according to a report prepared for the Halifax budget committee, the increase would mean an additional average of $173 per year for homeowners and $3,955 for businesses.
“Inflation has gripped the municipality and the once strong financial position of the municipality shows signs of erosion,” the report says.
He said the township’s operating pressures are increasing and another $55 million is expected to rise in 2023-24. These rising costs include staff compensation, fuel and utilities, and public works contracts.
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During a budget committee meeting Tuesday, Halifax CAO Jacques Dubé acknowledged that an eight percent increase is a “big number, and it’s a hard number to swallow.”
“Everyone is facing the same problem: higher interest rates, higher costs due to inflation… this is not necessarily new, but it is new to a lot of people,” he said.
“To change the number, from eight to six, or to four, there aren’t many options.”
Halifax Chief Financial Officer Jerry Blackwood said the city is taking a multi-year approach with capital budgeting.
“If you’re not looking to the future, certainly inflationary pressures, other pressures like compensation, are compounded,” he said.
According to the staff report, even with the substantial tax increase, “the City expects the base case for the 2024/25 budget to see more than $40 million in pressures.”
“This increase is still preliminary and does not yet include the impacts of another year of inflation,” he said.
According to the report, the municipality collects more than 82 percent of its revenue from property taxes and “has little alternative to paying the higher costs other than raising taxes or lowering service levels.”
He also said that labor shortages, such as those within the transit system, have “wreaked havoc on city services,” with positions taking longer to fill and causing service disruptions as a result.
In an interview after the budget committee meeting, Halifax Mayor Mike Savage said that while eight percent is a high number, it is still early in the budget process.
Final budget approval won’t come until April, he said, saying until then that “we have a lot of work to do.”
“I’m not convinced it should be eight percent. I would like to see some options, because I think right now there are people who are struggling and we don’t want to add to their burden,” Savage said.
“On the other hand, the things that make people struggle — the cost of fuel, the cost of food, the cost of getting things done — are the very things that we struggle with, and we don’t have the fiscal capacity or flexibility. like other orders of government.
“So we are going to have to see the projects we want to do, we are going to have to see how many staff we have, we are going to have to see everything and determine if that is optimal. And if not, we will make changes to the process.”
Satisfaction with service levels
Tuesday’s budget committee meeting was largely devoted to amending municipal law Strategic Priority Plan 2021-25who plans what the council’s priorities should be during its tenure.
As part of that, committee members reviewed a recently released survey that indicated a sharp decline in residents’ overall satisfaction with city services.
According to the results of the 2022 municipal services survey, only 52% of more than 4,000 respondents said they were satisfied or very satisfied with the overall provision of municipal services.
Last year, 81 percent of those surveyed said they were satisfied or very satisfied with municipal services, so this year’s results marked a drop of almost 30 percentage points.
During the meeting, Dubé said he was disappointed, but not surprised, by the survey results.
He said the municipality must focus on equity and equality in its investments, and look at traditionally underserved areas to improve services.
However, he noted that the COVID-19 pandemic may have put people “in a different frame of mind” and said the long-term impact of the global health crisis could be affecting people’s responses.
“I think people generally have a different frame of mind, and we’re probably seeing some of that reflection,” he said.
Dubé – whose last council meeting was on Tuesday as will be resign at the end of the year – also noted that the “double whammy” of supply chain problems and continued labor shortages has caused construction prices to rise and projects to be delayed.
Going forward, he said, the municipality must focus on what it can really offer and maintain its current assets.
“There is no shortage of good ideas, there is a shortage of money,” said the outgoing CAO.
The next Halifax budget committee meeting is scheduled for Friday at 9:30 a.m.
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