Well, Thunder Bay’s budget season is well underway but the public interest to date has been somewhat underwhelming but that is perhaps because the tax levy increase has been advertised as being 3.7 percent which is below the 6.1 percent in last year’s proposed 2024 budget. However, this year’s budget process has also been a little different than the past and somewhat more confusing than usual. Until this year, both the capital and operating budgets were done together and the final tax levy reported consisted of the taxes going to fund the operating budget and the taxes going to fund capital spending. We can term this the total tax levy – which now has been broken apart into the operating tax levy (the subject of current deliberations) and the capital tax levy (which was done last fall).
Last year, the original proposed total municipal tax levy (which incidentally only funds about 40 percent of total capital and operating spending this year– the rest coming from provincial and federal grants, other user fees, the TBayTel dividend and reserves) came in at about 232 million dollars (of which 211.5 million was the operating tax levy and 20.2 million was the capital tax levy). The 232 million dollar proposed total tax levy represented an increase of 6.1 percent from the previous year’s total tax levy. Based on the revised numbers presented in this year’s budget, the total tax levy in 2024 seems to have come in at just under 230 million dollars of which 209.6 million dollars was the operating tax levy and just over 20 million was the capital tax levy. In the end, based on these numbers, the actual total tax levy increase last year was closer to 5 percent than the initially proposed 6 percent.
This year, the budgeting process is essentially the same in that there is a capital and operating budget, but they were discussed separately and the tax levies reported separately as a capital tax levy and an operating tax levy. So, the 2025 capital budget process that concluded in the fall reported:
“The proposed 2025 Capital Budget includes $22,642,600 financed from the tax levy.
The “base” tax levy amount of $19,906,900 (2024: 19,178,100) is 3.8% more than the
previous year’s “base” tax levy which is in line with City Council direction.”
This was of course reported as a 3.8 percent capital tax levy increase because rather than 22.6 million dollars as the capital spending amount, only 19.9 million was used in the percent growth calculation because 2.7 million dollars in the total of 22.6 million was the retirement of a debenture. If one compares the total capital tax levy amount this year of 22.6 million dollars to last year’s total of 20.2 million dollars (rather than last year's "base" of $19.2 million) – then one gets a capital tax levy increase of 12 percent – substantially higher than 3.8 percent. I suppose one can quibble on how to account for money in the capital budget being used to retire debt but, in the end, a tax dollar is a tax dollar, and the 12 percent is probably a more accurate indicator of where your tax dollar is going.
So, putting everything together: In 2024, based on the revised numbers to date this year, the total tax levy was $209.6 million dollars for the operating budget and 20.2 million dollars for the capital budget for a total of $229.8 million dollars. This year, the operating budget tax levy is $217.4 million dollars, and the capital budget tax levy is $22.6 million dollars (which incidentally is only part of total proposed capital spending with the rest coming from grants and reserves and borrowing) for a total tax levy of approximately $240 million dollars - up just over 10 million dollars from last year. The percent increase in the operating tax levy increase is indeed 3.7 percent but based on how reporting used to be done in the past based on a total municipal tax levy, the increase from $230 million dollars to $240 million dollars is more like 4.3 percent - which by the way is still quite a bit lower than last year. However, the total tax levy increases this year is indeed about 3.7 percent if you believe that the 2.7 million dollars being spent in the 2025 capital budget to retire debt should not really be counted as part of the capital budget.
