City manager says tax increase 'lowest in Ontario'

Thunder Bay Mayor John Collin says the city's proposed 2025 municipal tax increase is currently the lowest among Ontario cities with a population over 100,000.

Collin acknowledged that some cities are still working on their municipal budgets and haven't released final numbers yet. But he said so far, only two cities have tax increases below 4%.

Collin said: "Ottawa is at 3.9%, and we're at 3.7%. We don't know what Ottawa's situation is... we don't know how much of their reserves they're using to achieve that. Whether that includes all their agencies, boards, and commissions costs, we don't have that level of detail."

Collin believes this statistic provides a "competitive advantage" that can attract people to settle in Thunder Bay.

A 3.7% tax increase means tax revenue will increase by $7.8 million before economic growth, bringing the tax-supported portion of the proposed budget to $217.4 million. The total operating budget will reach $448.8 million.

For homeowners wondering what this means for their tax bills, Commissioner of Corporate Services and City Treasurer Keri Greaves said, "It's estimated that for every $100,000 of assessed (property) value, there will be a tax impact of about $66."

This increase is slightly lower than the 3.8% target suggested by the administration in August. At that time, Collin said that even though city costs were expected to increase by 6% to 8%, it was worth "tightening the belt a bit" to remain attractive for investment.

Collin is committed to improving budget efficiency without significant service cuts, and on Friday he said they were able to do that.

"The community certainly won't notice this. We might cut $10,000 in service delivery, but overall, there won't be any major cuts to any services within the city," Collin said.

Although the city's tax-supported operating budget is $217.4 million, the city expects to collect an additional $1.7 million due to assessment growth.

Assessment growth refers to additional property taxes collected from newly built and expanded homes and businesses, which will bring the total municipal property tax levy to over $219 million this year.

"We're not going to use growth revenue to lower the tax rate. We're going to take the growth revenue," Collin said.

"We're going to put the growth revenue into savings to grow further. So the proposed rate is 3.7%, and that's it."

Collin explained that through a new assessment growth reserve fund, an additional $1.7 million can be put toward initiatives aimed at increasing the city's revenue faster by growing the tax base, with the hope of effectively lowering municipal taxes in future years.

Collin said Thunder Bay's property tax base has increased by 7.8% over the past 10 years, but inflation has risen 32% over the same period.

"So we've failed to keep up with inflation, by a factor of four. That's bad. When your revenue doesn't even keep up with inflation, balancing the budget becomes extremely difficult," Collin said.

The administration has tied property tax rate increases to the four-year rolling average of the Consumer Price Index (CPI), which measures consumer goods inflation.

Collin said: "I'll tell you, because we use specialized materials, equipment, and vehicles, municipal inflation is much higher than that."

He cited the cost of a new fire truck or ambulance as an example, noting that the cost of emergency services vehicles has doubled over the past four years.

"That's 100% inflation over four years, or 25% per year, which is much higher than CPI, but consumers don't care about that. Consumers care about their affordability, and that's why we use CPI as the benchmark," Collin said.

Greaves said that due to inflation, the city increased its contribution to the Superior North EMS reserve fund by $400,000 to replace aging ambulances, and allocated $1 million to the solid waste and recycling reserve fund to manage the future tax levy impact of the green bin organics program, which is expected to launch in 2026.

Wage increases are another pressure on the city budget, but the increase in staffing costs (excluding WSIB costs) has been capped at 1%.

To achieve this, management chose not to fill some vacant positions to offset wage increases.

"We've taken a more pragmatic view of vacant positions within the organization. Unfortunately, we know we'll never be able to fill all positions because recruitment is difficult. We're working to improve that situation," Collin said.

"But for 2025, we did a serious review, assessed how many vacancies there would be, and incorporated the vacancy numbers into the budget process."

It's worth noting that the proposed 2025 operating budget still requires debate and council approval.

Source: https://www.tbnewswatch.com/local-news/tax-levy-increase-lowest-in-ontario-says-city-manager-10093231