The tax increase includes a 1.4 per cent hike for policing and a two per cent levy for infrastructure renewal, leaving 1.5 per cent to be applied to the general operating budget. For the average homeowner, the increase equates to an extra $125 on next year’s tax bill.
During three days of budget deliberations council also voted to raise transit fares by 7.5 per cent a year over the next three years and increase downtown on-street parking rates by 20 per cent.
The tax hike and various user fee increases are a far cry from Mayor Larry O’Brien’s zero means zero campaign pledge.
When asked to explain his apparent retreat from zero means zero, the beleaguered mayor tried to down play his year old campaign promise.
“It’s a little off zero, but with the issues facing this city, I’m comfortable we made the best decisions we could,” O’Brien said before half-joking, “The rose-coloured glasses have come off.”
Heading into the budget deliberations the councillors were faced with the daunting task of coming up with $58.7 million in additional revenue and budget cuts to get down to zero per cent. In addition, they had to decided what to do with the city’s aging infrastructure. A motion put forward by Alta Vista Coun. Peter Hume called for $20 million to be spent on infrastructure renewal which would require a two per cent increase on its own.
Despite the apparent writing on the wall, Mayor O’Brien and a handful of councillors including Orléans Ward Coun. Bob Monette were still hoping to get as close to zero per cent as possible. In the end the closest they could get was 4.9 per cent.
Council’s first move was to approve the police services budget which came with a 1.4 per cent tax hike. After little more than four hours of budget deliberations, “zero means zero” was reduced to a not so distant memory.
Over the next two days managed to find $43.2 million in cuts and additional revenue which still left them $13.5 million short. To make up the difference they elected to raise taxes an additional 1.5 per cent to go along with the 1.4 per cent increase for policing. On Wednesday, council approved Hume’s motion calling for a further two per cent increase for infrastructure renewal, bringing the total tax increase to 4.9 per cent.
Of the $43.2 million in additional revenue and cuts council approved, $10.5 million will come from higher transit fares ($4 million), the increase in on-street parking rates ($3.7 million) and other user fees.
Less than 10 per cent of the shortfall, or $3.4 million will be made up through cuts – $1.9 million will be realized by terminating the city’s bio-diesel project, $1 million will come through administration cutbacks and $500,000 is being deferred for special events support.
Council approved a motion brought forward by Jan Harder to reconfigure the city’s risk management policy that will save another $3 million.
The remainder of the shortfall or roughly $26.3 million is dependent on money the city is hoping to get from the province and the ability of senior management to find an additional $5 million in administrative efficiencies on top of the $20 million they had already committed to find in 2008.
The $21.3 million the city is hoping to get from the province is a potential sticking point. During the 2007 budget process, council included $13 million in hoped for revenue from the province and only ended up getting $1.5 million.
As of September, the city was looking at a potential $12 million deficit, the majority of which is a direct result of the city’s failure to realize the lion’s share of the money they were hoping to get from the province.
On Wednesday, council heard that the deficit will be have to be recouped by raiding the city’s reserves.
The same policy will be followed to cover the $21.3 million built into the 2008 budget unless the province ponies up the funds.
City treasurer Marian Simulik warned council that the net result would leave the reserve funds “dangerously” low.
Taking into account the decisions made by council over the past three days and the need to cover off the $12 million deficit, there is only $20 million left in the city wide reserves, well below the $50 million mark they're supposed to be at.
The only other course of action that could be taken to make up for the unrealized funds would be to treat it as a budget pressure and either cut services or raise taxes.