Tax hike in billion-dollar budget

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This article was published 22/11/2016 (3024 days ago), so information in it may no longer be current.

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Winnipeg homeowners are facing a 2.33 per cent property tax increase next year.

Mayor Brian Bowman and his executive policy committee tabled the city’s draft 2017 operating and capital budgets Tuesday, which will see the city’s spending crack the $1-billion mark for the second year in a row at $1.08 billion.

If the budget is approved, the 2017 municipal property tax bill for a Winnipeg home assessed at $288,190 will be $1,694 — an increase of $38.51 from 2016.

“This is a fiscally prudent budget,” Bowman told reporters Tuesday. “It’s balanced and responsive to those who asked we get our own house in order.”

Bowman said all revenue generated from the property tax increase will be dedicated to infrastructure. Continuing the practice of the past two years, two percentage points of the increase will go to street renewal funds, while the remaining 0.33 percentage points will help pay for the completion of the southwest rapid transitway.

However, while the city expects to collect $20 million more in property taxes next year — $569.3 million in 2017 compared with $549.3 million in 2016 — city spending for road renewals in 2017 is the same as in 2016 at $105.2 million. Bowman acknowledged property taxes are rising to avoid service cuts and fee increases for city services, except for the already-approved inflationary hike to existing fees.

The 2017 budget also does not include hikes to the frontage levy.

“You have to pay for $105 million (for road work). The question is, how are you going to finance it?” Bowman said. “We obviously didn’t want to make cuts to services; we also didn’t want to increase or create new fees — and we’ve done that.

“This budget is about putting forward our blueprint for what we want. The reality is you can spend money on a lot of different things. What the budget does is say… this is what we think the priorities are.”

Transcona Coun. Russ Wyatt dismissed Bowman’s explanation, saying it’s clear the tax increase isn’t going to roads.

“They’re raising taxes, but the money isn’t really going into the roads… They are backing it out to balance the budget. It is a tax increase for the sake of a tax increase, and the residents aren’t getting enough” in return, Wyatt said.

In keeping with Bowman’s election campaign promise two years ago, the business tax rate is dropping again to 5.25 per cent from 5.3 per cent in 2016. The business tax rate was 5.7 per cent when Bowman became mayor.

The city’s total spending will jump by 2.31 per cent, which budget documents state is the lowest increase in 10 years.

The 2017 capital budget rises to $432.9 million, an increase of $73.8 million from 2016’s total of $359.1 million.

The city is required by provincial law to have a balanced budget every year, and the documents show it needed more than just property taxes and fees to accomplish that this year. The city expects to offset some of its 2017 expenses with:

• a $9.5-million projected year-end 2016 surplus;

• $4.8 million in 2017 department efficiencies;

• $10.5 million in cancelled projects;

• and $9.5 million in spending on projects deferred to 2018.

Revenue generated from growth fees on new residential developments in select suburban areas, which take effect May 1, will not be used in 2017 to fund any capital projects or offset operating costs. The budget estimates the fee will only raise $1 million in 2017, money that will be set aside in a reserve fund and will not be spent unless authorized by council.

While the budget proposes to hold the spending on roads to 2016 levels, there is a commitment to increase road renewal spending in the following five years: rising to $106.3 million in 2018 and $107.4 million in 2019, with a total of $685.2 million for 2017 to 2022. Without accounting for a one-time pension payment in 2016, the police budget increase is 2.6 per cent ($288 million compared with $280.7 million).

In contrast to previous budgets, when police spending outpaced all other civic departments, the 2017 budget caps police spending increases to 1.3 per cent — going from the adjusted $284.4 million in 2016 to $288 million. Without accounting for a one-time pension payment in 2016, the police budget increase is 2.6 per cent ($288 million compared with $280.7 million).

The fire paramedic service budget is slated for a 4.7 per cent increase ($199.2 million compared with $190.3 million).

It’s uncertain if city hall can hold the line on police and the fire paramedic service costs. Overtime costs for both have been problematic, and the police service has rising pension costs that wreaked havoc with the 2016 budget. Contracts with the unions representing police and firefighters expire at the end of the year, and neither union has shown much willingness for wage restraint in the past. The city’s bargaining power is further hampered by its inability to take a hard line on wages. Any unresolvable wage issues with either union will be determined by an independent arbitrator, which in the past has linked police and firefighter salary increases with those in other major western cities rather than making comparisons with other Winnipeg civic workers, who have often taken low wage increases — or no increases.

The draft subject will be reviewed by the standing committees of council over the next two weeks, when department heads will do a line-by-line review of their 2017 budgets.

Councillors will meet to pass the budget Dec. 13, when they will consider any revisions and changes proposed by the committees.

— with files from Kristin Annable

aldo.santin@freepress.mb.ca