City council heads into Monday night's regular council meeting divided on whether to move forward with a 2.5 per cent increase in property taxes after wrapping up four nights of budget deliberations last Thursday.
On Dec. 3, a slim majority of council showed support for a 2.5 per cent property tax increase and a transfer of $1.24 million in taxes towards the city’s capital fund.
NNSL file photo
In favour were Mayor Rebecca Alty and councillors Niels Konge, Cynthia Mufandaedza, Steve Payne and Stacie Smith.
Councillors Robin Williams, Rommel Silverio, Shauna Morgan and Julian Morris showed opposition, however. They backed another option that would result in a 0.89 per cent property tax increase with only $615,000 being transferred to the capital fund.
The city budget for 2021, however, ultimately hinges on whether the Government of the Northwest Territories comes through with an expected $855,000 in funding, as promised by MLAs in their term mandate to address shortfalls to municipalities.
“We were told that we should expect to see that money flowing soon, possibly before Christmas," said senior administrative officer Sheila Bassi-Kellett. "We haven't heard more than a verbal on that.”
The city has also been working with the understanding that $130,000 will be coming from the GNWT to operate its street outreach program.
On top of the uncertainty of GNWT funding, council was conflicted on whether to provide tax relief for ratepayers and businesses – particularly after a tough economic year due to Covid-19 – or to put money into the capital fund for major projects expected over the next several years.
Coun. Steve Payne said the 2.5 per cent property tax allows for a moderate increase given the expected spending pressures on the horizon while also putting a "substantial amount" toward capital.
NNSL file photo
"I would like to see a good amount transferred to capital because in the next couple of years we are going to have quite a bit of spending happening," Payne said. "Our capital fund is like our little savings account. Putting in $615,000, I don't think would be ideal."
Coun. Robin Williams said he did not agree with the idea of investing so much money in the capital fund. He preferred to concentrate on providing relief to taxpayers.
He added that there's no certainty whether the money saved for major capital items will even be spent since the largest planned project – the aquatic centre – depends on a public referendum to borrow money for it next fall.
"If there is a desire for this council to save for future capital projects, then I would encourage us to have that discussion and factor it into the budget at budget time," Williams said. "I'm not in favor of spending three days discussing cuts under a false pretense just to simply raise taxes for residents for unallocated and unbudgeted future projects."
Coun. Shauna Morgan said it would be "tone deaf" to put money into savings when it appears the capital fund is doing well with a closing balance of $21.3 million.
Businesses have been suffering due to the pandemic, she added.
"To me, this is not the year to be putting aside even more, extra, extra savings, just in case," she said. "I think it would be pretty tone deaf if we chose this year to boost our savings – our capital fund – even more than we had planned."
Mayor Rebecca Alty cautioned council about the need to sock money away for known and unforeseen capital projects on the horizon so to avoid borrowing.
She acknowledged that residents will be facing the property tax increase unevenly as some businesses in town have done better than they ever have, while others "have had the worst financial year of their lives." Nonetheless, coming cost pressures are "not going away, she advised.
"One of the open pits at one of the (diamond) mines is closing, which is going to be a huge hit," Alty said.
Coming annual capital costs are expected to increase even if the community decides not to go forward with the aquatic centre, she added, estimating about $19 million to $25 million will be required. She cited a new cell at the landfill and a water submarine line as examples of items that will need attention.
"This is a really light year and we're at $15 million," she said. "The next time we get to a quote-unquote light year like this isn't till 2028. We're looking at some pretty big capital works."
Fact file
Property tax hike history
2021 - 2.5 per cent (proposed)
2020 - 1.63 per cent
2019 - 1.44 per cent
2018 – 1.86 per cent
2017 – 1.23 per cent
2016 – zero per cent
2015 – zero per cent
2021 draft budget
Expenditures – $90,933,02
Revenues – $82,004,327
Debenture interest payment of $409,000
Debt principal repayments of $1,711,000
Capital investment – $19,004,059
Amortization – $15,558,000
Budget 2020
Expenditures – $92,125,010
Revenues – $79,139,109
Debt principal repayments – $1,658,000
Debenture interest payment – $463,000
Capital investment – $22,020,000
Amortization (annual depreciation of assets) – $14,943,000
Expenditures: $88 million
Revenues: $75.5 million
Debt principal repayments: $1.6 million
Debenture interest payment: $515,000
Capital investment: $20.4 million
Amortization (annual depreciation of assets): $14.6 million