Approving the 2024 budget with a tax increase of 7.6 per cent proved agonizing for city council, as members described the process as “not fun,” “a really difficult process,” “a real struggle” and “unpalatable.”
During its final budget meeting on Dec. 18, council voted 4-3 to pass the budget. In favour were Mayor Clive Tolley and councillors Jamey Logan, Doug Blanc and Heather Eby. Opposed were councillors Kim Robinson, Crystal Froese and Dawn Luhning.
Eby’s comments
The original mill rate hike recommendation was 4.13 per cent, while the police request added 2.09 per cent and increased the overall tax hike to 6.39 per cent, Eby said. Council then added 1.21 per cent in other “indiscriminate funding,” which included building and cyber insurance to better protect city assets.
The councillor appreciated how city administration provided a separate list of projects for next year that council could either approve or deny. In previous years, council had to hunt through the budget to find items to cut.
“I think this is a much better way. (However), it is difficult because we see the great initiatives and then have to say yes or no,” Eby said. “But I think this is a much more transparent from administration to council and council to the public.”
Residents need to know that council reviewed — but did not approve — many likeable projects because officials had to “hold a hard line on taxes,” she continued. While 7.6 per cent is “not fun,” a zero-per-cent budget is worse, which is what council did in 2020 during the pandemic.
“… I regret that to this day … ,” Eby stated. “We thought it would be a saviour and it did nothing.”
Eby added that she had faith in city administration’s leadership and expected to see great things in 2024.
Froese’s comments
Crafting this budget was a “really difficult process,” especially since next year’s municipal tax hike and the police request are higher than in 2023, while there are also the two infrastructure levies and the two four-per-cent water and sewer utility increases to consider, said Froese.
“I think we will see the stresses in our community,” she stated.
The initial tax increase was the bare minimum to maintain the inflation-adjusted “status quo,” so directors did a good job of maintaining budgetary progress, she continued. This budget concentrates heavily on infrastructure renewal, which is one quality-of-life issue residents appreciate.
Approving the third-party funding requests was also difficult, even though many groups are good stewards of their despite facing mounting costs, said Froese. Also, this budget is council’s best attempt to balance fiscal responsibilities while modernizing the city.
“This one has been a real struggle for me,” she said, adding this is the highest tax increase she’s helped approve since joining in 2016.
Robinson’s comments
It’s possible to justify a tax increase to people when it’s in line with inflation, but sometimes, this can be a subject “that sets people’s hair on fire,” said Robinson.
He then wondered if council could use funding from the investment portfolios to lower the tax hike to 3.5 per cent but pull the money later next year so the city could continue earning interest. Making this move would show residents that council is doing its best during a difficult time to develop a “palatable budget.”
Robinson added that with his suggestion, he considered the fact that council was already pulling $6 million from investments to support capital projects.
In response, city manager Maryse Carmichael said there were no surplus earnings available to do that, while the city would only erode the principal amount and lower the total.
Robinson was dubious with that answer, saying council usually hears from people how much better Moose Jaw is because of its investment fund. Yet, it appeared the earnings could only be used to fund capital projects.
“We always talk about how much money that fund makes, but we never talk about the interest we pay (on our debt),” he said.
He later clarified that he only wanted to draw down enough money to cover the operating budget’s shortfall of $2.7 million.
Criticisms of idea
Luhning criticized Robinson’s suggestion and echoed Carmichael’s comments that eroding the principal amount would reduce the support for the capital budget, which would force council to find more items to cut.
“There’s nowhere else we can go into those budgets without hindering the capital budget,” she added.
“Well, there you go,” muttered Robinson.
Eby also knocked Robinson’s idea, pointing out council would have to increase taxes by 17 per cent without the $6-million investment earnings drawdown. She was thankful that those portfolios were doing their jobs now and for the future — if council did not erode the principal.
Furthermore, since 2019, council has used nearly $28 million in earnings for capital projects, with capital being tangible items that people can see and feel, Eby added.
Logan’s comments
No one wants to be in this position, considering no one wants to pay 7.6-per-cent more, although city administration has been diligent and wise in spending money in appropriate places, said Logan.
There were many needs-based projects and few wants-based items in the budget, but council had to cut many of the former even though they were great, he continued. This budget increase is necessary so future councils don’t face worse financial problems.
“If we want to improve our tax base, we need to go ahead with some of these initiatives,” Logan added.
Blanc’s comments
The tax increase isn’t great, but to reduce it would force council to make further cuts to services, capital projects and third-party requests, which would likely push 2025’s tax increase to 10 per cent, said Blanc, noting many communities are facing the same budget challenges.
While some people can accept higher taxes, they want to see results from the use of their tax money. He noted that council is meeting that request by increasing the capital budget to fix roads, cast iron pipes, sidewalks and other infrastructure.
“This has been a tough budget … . It’s not a great budget, but it’s the best we can do,” Blanc added.
Tolley’s comments
“I find this unpalatable,” Tolley said, noting council spent plenty of time developing the budget and did not spend money foolishly. He reluctantly supported the budget, saying that reducing the tax increase would cause more problems next year.
One solution to the city’s revenue problems is to increase the tax base by attracting more residents and businesses, he said, adding this budget is all about “short-term pain for long-term gain.”
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