Municipal budget season is well underway in Thunder Bay, but
the main public theatrics over the 2025 budget should be transpiring over the
next few months. The most recent indication
is that City Council is expected to target a 3.8
percent municipal tax levy increase.
There are budget pressures underway not the least of which is apparently
an additional $5.6 million to cover wages and benefits. Putting budgets into
context is always more useful if a long term is taken and fortunately the Ontario
government does provide resources to track municipal spending. Here, a useful tool are the multi-year financial
reports provided from the Financial Information Returns
which provide standardized reporting of a municipality’s financial activities
as well as additional statistical information.
Figure 1 presents municipal property taxes per household and
water and sewer charges per household since 2000. While many other municipalities appear to
have filed their 2023 returns, Thunder Bay appears to be lagging and therefore
this long-term snapshot only goes to 2022.
From 2000 to 2022, municipal property taxes in Thunder Bay have nearly
doubled going from $1,947 to $3,918. The
growth of water and sewer charges has been more pronounced going from $379 per
household in 2000 to $1,158 in 2022 – a tripling of the average per household charge.
Figure 2 plots a dual scale chart with the total municipal
workforce (full time, part time and seasonal) on the right size axis and the
value of wages, salaries, and benefits per employee on the left axis. Perhaps one of the reasons Thunder Bay is
lagging in putting out its financial information is that it is a bit short
staffed given that the total size of the municipal workforce has declined from a
peak reached circa 2013 and has been pretty flat since 2016. On the other hand, since 2000, the size of
the municipal workforce has gone from 2,344 employees (there is a data gap
in 2003) to 3,404 in 2022 – an increase of 45 percent. Over the same period, average wages, salaries and
benefits per employee have grown from $46,978 to $83,799 – an increase of 78
percent.
However, these indicators and the increases over time are
best placed in context to an assortment of other indicators and this is done in
Figure 3 which plots the percent increase in an assortment of indicators from
2000 to 2022. As one can see, prices in
Thunder Bay as measured by CPI inflation have risen by 49 percent. Own purpose property tax revenues (the total tax
levy) has grown 122 percent while total grants revenues have only grown by 55
percent. Municipal property taxes per
household have grown 101 percent while water and sewer charges have grown 205
percent.
Meanwhile the total taxable assessment has grown by 60
percent which when divided by the number of years works out to an annual
average growth of 2.7 percent. This
seems at odds with the fact that published reports have been of average assessment
growth over the last ten years of only 0.6 percent annually.
However, one suspects that the 0.6 percent is real growth – after inflation
– because the average annual assessment growth of 2.7 percent minus the average
annual inflation rate of 2.2 percent from 2000 to 2022 yields real average
annual assessment growth of 0.5 percent.
Given that property prices have grown substantially in Thunder Bay over
the last decade in particular, the nominal rather than inflation adjusted tax
assessment has been growing in tandem
More interesting is the fact that between 2000 and 2022, the
population of the City of Thunder Bay has actually decreased by 6 percent. This also seems at odds with recent reports
that Thunder Bay is over 130,000 people but it must be remembered that FIR
deals with municipal finances and the population of the City of Thunder Bay is
that within its city limits while the recent population reports are for the larger
Census Metropolitan Area. Essentially,
growth in Thunder Bay has been occurring outside the city limits where they do
not have to pay property taxes to the City of Thunder Bay.
And finally to round things off, the municipal workforce over the
2000 to 2022 period grew by 45 percent, the total compensation per employee
grew 78 percent and the total value of building permits grew 85 percent. However, after inflation of 49 percent,
salaries and benefits per employee only grew in real terms by 29 percent while to end things,
the real total value of permits grew by 36 percent.
