Halifax Regional Council is considering an eight-per-cent tax hike 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 average extra $173 per year for homeowners and $3,955 for businesses.
“Inflation has gripped the municipality and the municipality’s once strong financial position is showing signs of erosion,” said the report.
It said the municipality’s operating pressures are increasing, and are expected to rise by another $55 million in 2023-24. These increasing costs include staff compensation, fuel and utilities, and public works contracts.
During a budget committee meeting on Tuesday, Halifax CAO Jacques Dubé acknowledged that an eight per cent increase is a “big number, and it’s a hard number to swallow.”
“Everybody is faced with the same problem – higher interest rates, higher costs due to inflation … this is not necessarily new, but it’s new to a lot of people,” he said.
“In order to change the number, from eight to six, or to four, there’s not very many options.”
Halifax CFO Jerry Blackwood said the municipality is taking a multi-year approach with the capital budget.
“If you’re not looking ahead, certainly inflationary pressures, other pressures such as compensation, they compound,” he said.
According to the staff report, even with the substantial tax increase, “the municipality is expecting the base scenario for the 2024/25 budget will see over $40 million of pressures.”
“This increase is still preliminary and does not yet include the impacts of a further year of inflation,” it noted.
According to the report, the municipality collects more than 82 per cent of its revenues from property taxes and “has few alternatives to pay for higher costs other than raising taxes or lowering service levels.”
It also said labour shortages – such as those within the transit system – have “caused havoc on the municipality’s 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 while eight per cent is a big number, it’s still early in the budget process.
Final approval of the budget won’t come until April, he said, and until then, he said “we’ve got a lot of work to do.”
“I’m not convinced it needs to be eight per cent. I’d like to see some options, because I think right now there’s people who are struggling and we don’t want to add to their burden,” Savage said.
“On the other hand, the things that are making people struggle – the cost of fuel, the cost of food, the cost of getting things done – are the same things that we struggle with, and we don’t have the fiscal capacity or flexibility as other orders of government.
“So we’re going to have to look at the projects that we want to do, we’re going to have to look at how many staff we have, we’re going to have to look at everything and determine if that’s optimal. And if not, then we’ll make changes to the process.”
Satisfaction with service levels
Tuesday’s budget committee meeting was largely dedicated to amending the municipality’s 2021-25 strategic priorities plan, which plans out what council’s priorities should be during their mandate.
As part of that, committee members looked at a recently released survey which indicated there was a sharp decline in residents’ overall satisfaction with municipal services.
According to the results of the 2022 municipal services survey, just 52 per cent of more than 4,000 respondents said they were satisfied or very satisfied with overall municipal service delivery.
Last year, 81 per cent of respondents said they were satisfied or very satisfied with municipal services, so this year’s results marked a drop of nearly 30 percentage points.
During the meeting, Dubé said he was disappointed, but not surprised, by the results of the survey.
He said the municipality needs to focus on equity and equality in their investments, and look at traditionally underserved areas to improve services.
However, he noted that the COVID-19 pandemic may have put people “into a different funk,” and said the impact of the long-term global health crisis could be affecting people’s responses.
“I think people are generally in a different mood, and we’re seeing probably some of that reflection,” he said.
Dubé – whose last council meeting was Tuesday as he will be resigning at the end of the year – also noted the “double-whammy” of supply chain issues and ongoing labour shortages has caused construction prices to go up, and projects to be delayed.
He said looking ahead, the municipality needs to focus on what it can truly deliver and maintain its current assets.
“There’s no shortage of good ideas, there’s a shortage of money,” said the outgoing CAO.
The next Halifax budget committee meeting is scheduled to take place Friday at 9:30 a.m.
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