City expected to fall $11M short in tax revenue from new builds, home additions, renos

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This article was published 13/01/2025 (237 days ago), so information in it may no longer be current.

The City of Winnipeg expects to earn millions less than it expected in one category of 2024 tax revenues, which would put a new strain on this year’s budget.

A new financial report predicts the city will complete 2024 with about $11.3 million less than it expected to earn through “net taxes added,” which includes levies from new buildings, additions and renovations. The loss is expected to be offset by a $4.6-million boost in property tax revenues.

“With all the housing starts, with all the effort in 2024, I am personally surprised to see this down as far as it is. It might be a timing issue (since many projects are approved but not yet built),” said Coun. Jeff Browaty, council’s finance chairman. “We also saw our permit and inspection revenues down in 2024, which correlates with this.”

The city originally expected to earn $17.8 million through net taxes added last year.

Browaty (North Kildonan) said part of the change may be linked to Winnipeggers completing fewer home additions and large renovations last year, following a pandemic surge in that construction.

To fill the revenue gap, the city expects to transfer $6.7 million from its financial stabilization reserve to cover the missing revenue forecast, which would leave just $9.7 million in the rainy-day fund to cover the projected 2024 deficit, according to data up to Nov. 30.

The deficit for the overall tax-supported operating budget is now expected to reach $20.5 million by the end of 2024.

“If the remaining deficit of $10.8 million is not addressed through expenditure management practices, other revenue sources or year-end (changes), a provision will need to be included in the 2025 budget for any remaining amount,” the report notes.

Browaty said he’s hopeful the 5.95 per cent property tax increase proposed for 2025, along with slowing inflation rates, will help improve city finances this year. He said savings to balance the books and make up for lost revenue could occur throughout this budget year.

Mayor Scott Gillingham said the revenue loss is disappointing.

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“It’s always a concern when we don’t collect the amount of revenue we have projected as a city. However, the lower… revenue reflects the fact that there just were not as many builds in 2024 as we had anticipated,” said Gillingham, suggesting that trend wasn’t limited to Winnipeg.

With 12,000 units of housing approved this year, the mayor expects more development in 2025.

While Gillingham said addressing any funding gaps carried over from 2024 is “the first work” of next year’s budget, he doesn’t expect service cuts at this point.

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“There’s no intent, there’s no focus right now (on) cutting. The (chief financial officer) is working on a plan to deal with his deficit,” he said.

In an email, city spokesman Kalen Qually said the timing of adding properties to the tax roll affects which newer levies are counted in the “net taxes added” category, which is partly why property taxes increased as net taxes dropped.

“Other things that can impact net taxes added could be market conditions, level of construction activity, and interest rates,” wrote Qually.

joyanne.pursaga@freepress.mb.ca

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Joyanne Pursaga
Reporter

Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.

Every piece of reporting Joyanne produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.