The Next Council: The Challenges for Thunder Bay

 

Shortly, there will be a municipal election in Thunder Bay with a new council selected.  It is likely there will be a major change in composition with quite a few new faces and this will usher in a period of change though perhaps not as much change as one might expect.  In the end, The City of Thunder Bay is a corporation and what an election does is essentially select its board of directors who serve as an executive laying out direction with execution and implementation being the responsibility of the City Administration. Sometimes, the more things change, the more they stay the same.

 

The City Manager reports to City Council and is responsible for putting into effect the directives of council within the framework of what is allowed by the Province of Ontario. More importantly, the City Manager and Administration possess the information set from which the councillors then make their decision.  As well, given their role as full time employees rather than part-time representatives,  they have the time to deal with the detail of issues.  Inevitably, some councillors will find the level of information and detail overwhelming.  The overwhelming  complexity of issues in the past has often resulted in meetings where councillors on the advice of administration quickly make decisions on millions of dollars of spending and complicated bylaws with long-term impact while then spending hours debating relatively minor matters involving a few thousand dollars.

 

There are some departing members of the outgoing council that it will be sad to see go given that among them are the remnants of what passes for a fiscal conservative in Thunder Bay political life these days.  Based on a perusal of the candidate slate currently up for election, this is likely to be one of the more activist councils that Thunder Bay has seen in some time and their first test will be the 2023 budget.  A relatively new council will be heavily dependent on the advice of administration and also eager to deliver on whatever promises they have made and agendas they campaigned on, and the result will likely be a heftier tax increase than has occurred over the last few years. 

 

The Mayor’s position is essentially one of first among equals despite whatever strong mayor powers are eventually afforded by the provincial government to Thunder Bay.  The outgoing Mayor was good for Thunder Bay given he was articulate, well informed and lent a certain dignity and gravitas to the position – though some times while in the midst of yet another marathon Zoom meeting he seemed increasingly exasperated and resembled an artist being forced to work on a much smaller canvas.  Such a sentiment is understandable, but the Mayor might have been happier by drawing inspiration from others in Thunder Bay and northern Ontario in a range of positions and occupations who have made a career of working on a smaller canvas.

 

In the end, the challenges for the next council are many.  There is a housing and homelessness crisis in Thunder Bay that parallels that in other cities given the climb in rents and home prices during the course of the pandemic.  There is crime – with 12 murders already in 2022, Thunder Bay is well on the road to regaining its title as Canada’s murder city in per capita terms. And of course who can forget infrastructure whether it is roads and sewers or recreational infrastructure given that the Turf facility has reared its head as an issue in the election with some candidates expressing support for the concept but not at the original high cost. 

 

Surprisingly, little mention has been made of the other chaotic infrastructure problem Thunder Bay faced during the pandemic which was the plague of leaky pipes in homes throughout the city  in the wake of the sodium hydroxide water supply lead mitigation experiment.  Needless to say, the public silence from the outgoing Mayor and council on this issue - no doubt on the legal advice from City Administration and its lawyers given potential costs and legal liabilities - has left a bitter taste for many.  So much for a friendly community oriented city with your elected representatives always ready to lend an ear.

 

And the biggest issue?  Well elections are in the end obviously no place for serious long term policy discussions but the fact remains that Thunder Bay’s regional role as a centre for a growing and under counted Indigenous population is the big one.  Increasingly Thunder Bay and its municipal ratepayers are paying for regional services on a city tax base.  The latest example here is in the case of the Thunder Bay Police Service and the recommended changes that among other things ultimately mean the Police Service has to take a regional lens to its operations.

 

A move to a more regional approach in policing in the end is a continuation of a trend over the last twenty-five years that can be best described as informal and piecemeal northwestern Ontario regional government by default - a regional hospital service, a district social services board, a district emergency service organization, and regional public utilities such as Synergy North and TBayTel. Indigenous organizations have also established presence in Thunder Bay and Sioux lookout providing regional services to their members.  Yet, there was never really any type of democratic regional mandate for this evolution.  True, one can always blame the province or Ottawa given that much of this is under provincial or federal jurisdiction but our local municipal leaders to date have ignored the long term picture painted by this evolution.  After all, it is a complicated and overwhelming set of circumstances.

 

Of course the trend to more regional services is also a function of the claim that Thunder Bay has under counted its population and more services need to be provided to service this under counted population.  But how can you provide more services if you do not know how many people there are? After all, on the one hand there are claims made by some municipal candidates we are losing people “daily” to other cities but at the same time there are apparently tens of thousands more people here who need services.  Which is it?  Unfortunately, social surveys based on self-reporting and life stories however compelling and reflective of reality do not a rigorous estimate make.   

 

At minimum you would think we could put an estimate together ourselves based on local and regional electricity use from Synergy,  cell phone and phone subscriptions from TBayTel, patient counts (given they have addresses or OHIP cards) from medical facilities in the region, and school enrollments from all the public boards.  These should be correlated with population growth and enable an estimate with upper and lower bounds keyed to census benchmarks.  In the absence of this, one ultimately has to accept the Census results which do say that according to the 2021 census, the number of Indigenous residents of the Thunder Bay Census Metropolitan Area grew by about 12 per cent between 2016 and 2021, to a total of 17,000 people.

 

And so, what next?  Well, one suspects that after a honey moon period of sunny optimism,   it will be business as usual for the next council accompanied with a fairly hefty tax increase.  All the candidates acknowledge a lot of issues ranging from roads to crime to  homelessness to mental health to opioid addiction.  They don’t agree with increasing what taxpayers pay when it comes to revisiting the Turf facility and want to explore alternatives  like donations and fundraising but in the end they will solve problems by “taking action” and “working tirelessly” which usually means a tax increase as a starting point under the banner of investing in ourselves and then avoiding constituents when they complain too much. 

 

Nevertheless, hope springs eternal.  Maybe this council will be different.

 

 

Thunder Bay: The Challenges Ahead in 2022

 

The start of a new year is always a time for reflection on the past and a looking ahead to the future.  During a pandemic which has yet to see its end, the temptation is to simply to hunker down and focus on the present. Yet, Thunder Bay is a city that needs to look ahead given the collection of challenges that it faces.  One could summarize the challenges as threefold - the social fabric, the economy and civic finances – which are often considered as separate compartments, but which move together as one given, they are all related and intertwined.  Our tendency is always to compartmentalize because that is of the course the easiest way to try and understand the problems, but it is important to realize that the solutions themselves are not organized in watertight compartments.

 

To start with, there is the deteriorating social fabric that has created two Thunder Bays – a Thunder Bay of crime, homelessness, poverty and addiction and another that is a relatively prosperous enclave that on a day-to-day basis does not see the other side.  Intertwined with all of this has been a history of racism with respect to Indigenous peoples in the community. Occasionally, there is spill over between the two worlds especially with respect to crime and addiction but for the most part they are indeed two separate worlds.  One of the best recent overviews of poverty and social issues in Thunder Bay comes from a 2019 community report by the Wellesley Institute documenting Thunder Bay social and developmental indicators that lag the provincial average as well as note a high proportion of households with an average income below $20,000 .  Indeed, compared to the rest of the province, a higher proportion of youth in Thunder Bay live in low-income households.

 

The deteriorating social fabric has generated a growing long-term demand for emergency services. Indeed, many of the demands made on police, paramedics and fire are social and domestic disputes or relate to mental illness.  The statistics for crime are telling because while total criminal violations per 100,000 are down somewhat, those for homicides have been on an upward trend for quite a few years now as Figure 1 illustrates.  Table 1 illustrates the rate per 100,000 for several select criminal code violation categories and they suggest that despite an aging population and a decline in some types of crime, Thunder Bay has become a more violent place in general as the number of total violent criminal code violations per 100,000 has grown by 17 percent since 2015.  

 

 

 

Per 100,000 population, homicides have been the highest in the country for several years now while the city’s booming gang related drug trade has also resulted in a nearly 50 percent increase in total drug violations since 2015.  At the same time, the pandemic itself has resulted in fewer service calls for police especially around property crimes given more people are at home thereby better safeguarding property.  However, other emergency services – namely the Superior North EMS paramedic services have seen an increase in service calls per capita and are forecasting large increases well into the 2020s.  Indeed, even city officials have acknowledged that the rising demand for emergency services in general is leading to cost increases that are unsustainable when it comes to the city budget.

 

Aggravating the social distress by fueling homelessness is the rising cost of housing in the city both in terms of rents as well as the price of homes.  While Thunder Bay’s housing prices remain a far cry from Vancouver or the GTA, since 2010 they have grown at an uncharacteristically fast pace with the average MLS price being $144,034 in 2010 and forecast at $289,186 in 2022 as illustrated in Figure 2.  While the demographic trend towards smaller households and low interest rates have been factors as demand drivers, also important is the slow pace of new residential construction in Thunder Bay on the supply side.  Housing starts are at their lowest point in decades while new apartment construction has been unable to fill the gap.  The average of course masks the range in prices and there are homes approaching $1 million in Thunder Bay.  As for rents, since 2010, the average rent for a 2-bedroom apartment in Thunder Bay has grown from $761 to $1,089 while the rent for a larger three bedroom went from $867 to $1,358 – increases of 43 and 57 percent respectively.  

 

 

 

These social issues in the end are effectively compounded by an economy and by extension a property tax base that has not really grown in several decades.  As Figure 3 illustrates, employment in Thunder Bay has essentially been flat for almost 20 years.  If the rest of the province was in a similar boat that might be somewhat more palatable but going only forward from the Great Recession, Thunder Bay has seen a decline in employment growth not to mention a compositional shift. Indeed, a rising share of that employment – approximately 30 percent - is now in the broader public sector given the declines in industrial employment over the last two decades.  

 

 

 

For decades the top ten employers in Thunder Bay have been broader public sector institutions ranging from municipal, provincial, and federal governments to school boards, the hospital, and the post-secondary sector.  And of course, there is construction which has been increasingly dominated by public sector projects of one type or another. While the regional mining sector has been a bright side in Thunder Bay’s role as a mining services sector it remains that the mining sector in the region is not as labour intensive as it was in the past. And yet, Thunder Bay appears at least in some regards to still have some substantial gleams of prosperity if the number of shiny new trucks being driven around can be taken as an indicator.  But then, the pandemic has seen the city, like much of the country, awash in government support payments.

 

Which then brings us to the final challenge which is really driven by the first two.  The economy in the city and private sector wealth generation has not been robust.  We have a set of social issues which has been fueling increasing demand for services in health and emergency services – many which are provided by municipal government. And we have a municipal government whose finances are stretched given the demands being placed on it and the resources available.  The sources of municipal financing are threefold -the property tax, government grants and assorted user fees and other own source revenues including a dividend from the municipal telecom company.  Of these, only taxes and user fees are directly within the control of municipal government, and they make Thunder Bay property owners the main funders of increases in municipal spending.

 

In the case of Thunder Bay, the property tax is increasingly borne by the residential taxpayer especially given the decline in industrial and business assessments over the last two decades.  Grants in per capita terms have essentially been flat notwithstanding the COVID-19 supports which have helped fuel some of the surpluses of recent years.  Nonetheless, the 2022 budget exercise will be an important one given the projected gross tax levy increase of 2.44 percent which would raise the tax levy by almost $5 million and bring the total levy to nearly $209 million.  Water infrastructure issues are being dealt with by a 3 percent increase in water rates.  However, the gross- tax supported budget – when one adds the capital budget – will be up about 23 percent mainly because of the near doubling of the capital budget with major capital projects planned such as a new police station at nearly $60 million.  Given the limits of the tax base and available reserves, this new capital spending is going to be funded primarily by debt.  While interest rates are still at historic lows, increasing the city’s debt will have ramifications down the road with increased debt servicing costs.

 

There is no easy solution to these problems.  Crime and social problems cannot be solved on a municipal budget alone and require provincial and federal support.  At the same time, raising municipal taxation rates more will continue to place the burden of these problems squarely on the residential taxpayer.  The municipal tax base was designed to provide revenues to service property. It was not designed to provide a broad range of social and health services to the public.  Yet, municipal councillors do not always seem to be sensitive to this point.  In response to the release of the 2022 budget, one councillor has already stated that we should add $1 million to an already rising police budget –already up by $1.8 million - to hire more officers. How simply adding more officers will fix the complex problems of crime and social issues needs to be explained.  As another councillor has noted, the costs for emergency services are exceeding inflation for the city again reinforcing the issue of sustainability.  It is only a matter of time before yet another helpful councillor with aspirations of grandeur will suggest that tax increases should match the new higher inflation rates nearing 5 percent nationally.  Unfortunately, residential ratepayers pay taxes out of current incomes that do not rise lockstep with inflation.

 

If Thunder Bay wants to spend even more on police as a solution to its crime and social problems, then it will have to spend a lot less on other things.  In the absence of external resource increases from the provincial or federal government, you cannot spend more on police services and just as much more on everything else and limit the tax levy increase to 2.44 percent.  There really is no other way to explain it.