Winnipeg Free Press - PRINT EDITION

City budget exposes fiscal gap

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The Manitoba government raised the PST one percentage point and earned nearly $300 million in new revenue. The city raised property taxes by 2.95 per cent for a grand total of $14.5 million in additional income.

And there's the rub.

The fiscal imbalance between Winnipeg -- the prime generator of economic activity in Manitoba -- and the Selinger government is so wide it seems almost pointless for the city to raise taxes for anything other than keeping up with inflation.

The city's proposed operating budget will dedicate two percentage points of the tax increase to road renewal, while 0.95 per cent will be used to manage the rising cost of government.

Most civic fees, fines and services are also increasing, along with frontage levies and the usual dividend from the water and sewage utility, worth about $20 million this year.

The latter transfer is inappropriate because water rates should not be used to support general revenue, but the city feels it has no choice but to raid the utility. If they didn't loot the water and waste department, the city would have had to raise taxes another four percentage points, or cut services.

Unlike the province, which is averse to cutting services or staff, the city is introducing mandatory unpaid leave of 3.5 days during the Christmas season for non-essential services for an annual saving of $1.5 million. The measure is subject to negotiations with the city's unions.

It is also cutting other staff for savings of $2 million, and budgeting for $14.1 million in savings through vacancy management.

The city also rescinded the dramatic and unwarranted $40,000 increase in councillors' ward representation allowance, which brought them to $114,000 annually earlier this year. The budget proposes a decrease of $37,000, to $77,000.

This is the third tax increase in as many years. Mayor Sam Katz said rate hikes will be the new normal unless the province decides to hand over a single point of PST to the city or open up new revenue sources for the city.

If the mayor runs again next year, it will clearly not include a promise of a tax freeze. That era is over, he said.

About 12 per cent, or $113 million, of the city's $967-million operating budget is derived from provincial and federal coffers, so it's unfair to say senior levels of government have completely abandoned Winnipeg and other municipalities.

But it's not nearly enough and most of the provincial money is linked to its own agendas, such as policing.

Mr. Katz's complaints are not the isolated whining of a single mayor. They are a common refrain in municipalities across Canada, which are struggling under huge infrastructure deficits.

In fact, other cities have raised property taxes at a much faster pace. Between 1999 and 2013, Edmonton's taxes rose 67 per cent, Calgary's 63 per cent, Saskatoon's 54 per cent and Vancouver's 52 per cent.

In comparison, Winnipeg's taxes went up about seven per cent during that time. If attitudes don't change on Broadway, Winnipeg will be playing catchup for decades.

A 2007 Federation of Canadian Municipalities study said cities needed $123 billion just to save existing infrastructure.

The Conference Board of Canada has also said cities "are not receiving the investment they need to fulfill their role as drivers of national prosperity."

Winnipeg, meanwhile, is heading deeper into debt following a sustained period during which per capita debt declined. By 2018, according to estimates, the city's total per-capita debt, including utilities, will be close to $1,800, the highest it's been in decades.

In financial terms the city is sliding backwards, but there will be no reversal of fortune so long as the city is denied new sources of revenue.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition November 30, 2013 A16

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