Well, Thunder Bay’s municipal budget opera season is now in
full swing with assorted fiscal choruses and arias being played in lockstep as
we move towards finalizing the 2024 budget.
Like many municipalities across Ontario, there is increasing budgetary pressure to raise taxes. The narrative this budgetary opera season in Thunder Bay is a little more complicated because
along with planning for 2024, there is also the matter of dealing with the remnants
of the 2023 season. This task has proven
to be a bit more mettlesome than usual but the end result will probably be a
fairly large tax increase in 2024.
Very often, the proposed budget generally includes a tax
levy increase that is higher than what is eventually opted for as opposition
mounts. For example, the 2023 budget
originally put forth 6.2
percent levy increase that went to 5.6 percent and then 5
percent but eventually passed at a 4.4
percent levy increase (after growth).
This before and after growth distinction is one that has always been a
bit of a diversion because after all, a tax increase is a tax increase whether
one factors in growth in the tax base or not.
One is indeed surprised that the
recent increase in managerial salaries of 12
percent at the City of Thunder Bay was reported as a nominal increase rather
than after growth or after inflation.
The last budget was a particularly vexing one mainly because
the 2023 budget process was with a new council and they no doubt very much did
not want to debut with one of the larger tax increases in recent history. However, everything comes at a price and the
price was taking one million dollars out of the reserve fund and the task of
finding several million dollars more in terms of savings.
That process has not gone well, and one suspects behind the
scenes municipal movers and shakers do not mind because they would be happier
with a tax increase than cuts. The
initial round of cuts tended to deal with relatively
high profile but small budget items such as cuts to fireworks, movie nights,
and Christmas Day transit service as well as items like the sister cities program.
As well, there were the controversial cuts to the Neebing Arena as well as outdoor
rinks that in a hockey town like Thunder Bay generated more of a backlash. Yet, the backlash was dealt with by delaying
the cuts and taking a “survey” which is really not a survey at all.
The survey site consists of a web
page and link asking the question of whether you supported the proposed
outdoor rink reduction and was really not a statistical survey but a consultation. The over 80 percent opposition comes from the
fact that there is a certain self-selection bias here in that the survey is
voluntary and those opposed to the cut of 31 out of 39 outdoor rinks had a
strong incentive to go on and register their opposition which explains the 80
percent opposition rate. Needless to
say, the odds are that after rousing public sympathy for the rinks, the next
budget offering will be an orchestrated refrain about how we will have to raise
taxes more if you want to keep the rinks open.
The reality is that the big money in the City of Thunder Bay
budget is not to be found in hockey rinks or fireworks or movie nights but in
two key areas: Public Safety and Public Works.
The accompanying figure has been constructed using the City of Thunder
Bay’s own data
and reveals that the Public Safety Category occupies nearly 40 percent of
municipal spending while the Public Works Category is nearly 20 percent. In other words, with nearly 60 percent of
spending in these two categories, looking for cuts in the other 40 percent of
spending is going to be difficult as a budget solution. Even the claim that much of our spending is
mandated by the “province” looks a little lame as the legislated programs
category accounts for barely one percent of spending though some additional
mandated spending is also internalized within some of the other categories.
In the end, the two largest potential sources of savings lie
in Public Safety and Public Works, followed by Parks and Recreation,
Contributions to Outside Boards and Agencies, Social Services and then Debt Charges.
We are in a situation where without any serious attempt to sit down and examine
them, the two largest categories are going to increasingly take a larger share
of spending. This will take money from quality-of-life
categories such as Parks and Recreation (though oddly enough there is still
interest in a new Turf facility on the part of the city administration but I
guess that is the capital budget rather than the operating budget at least for
now) and then contributions to associated community groups. Cuts in these other categories will not be sufficient.
We are heading for a scenario where there will be higher taxes
and fewer services. It will be
interesting to watch City Council and Administration sell that one.
