Gillingham forced to stick political neck out in high-risk, unlikely-reward fiscal climate

Opinion

Hey there, time traveller!
This article was published 11/12/2024 (300 days ago), so information in it may no longer be current.

You knew bad news was coming when Mayor Scott Gillingham’s office issued a news release Tuesday — a full day before the 2025 preliminary operating budget was to be revealed — trumpeting the fact that Winnipeg “Leads Canada in Property Tax Affordability.”

For veterans of the civic budget process, that was a pretty clear tell that the news wasn’t going to be good. And when the budget documents were tabled just before midday Wednesday, there were details of a one-year 5.95-per-cent property tax increase.

The budget documents make it patently clear that while this is the largest single-year increase in Winnipeg in more than quarter-century, it is still one of the smallest single-year property tax hikes in the country. And that it appears, right now, to be a one-off for 2025; in 2026 the expectation is the annual tax increase will return to 3.5 per cent.

And further, even after the proposed hike is applied to our tax bills, Winnipeg will, arguably, continue to pay the lowest property taxes in the nation.

Those are all good points. Even so, it remains unclear whether Winnipeggers are prepared to buy what the mayor and council are going to try to sell over the next few months.

Right now, any increase in taxation or living expenses is an open declaration of war with inflation-weary Canadians.

It is true that the proposed tax increase will, according to city calculation, add about $120 per year to a home worth $371,000. Obviously, the impact will be greater for more valuable homes, but even then, it is not unfair to characterize this as a modest increase in the tax burden of individual homeowners.

The problem is that right now, any increase in taxation or living expenses is an open declaration of war with inflation-weary Canadians.

Just about everyone — even those who have been barely impacted by inflation — are obsessed with the cost of living, and their angst is scaring the crap out of governments at all levels.

In response, many have undertaken “affordability rebates,” desperate and indiscriminate handouts of taxpayer money meant to soothe our inflation-raddled minds.

With inflation still a concern and interest rates running high, can Gillingham sell Winnipeggers on what is likely the city’s largest proposed property tax increase this century?

He and Coun. Jeff Browaty, chair of the finance committee, worked diligently Wednesday to create a favourable context for this budget.

They emphasized that next year’s tax increase comes with a promise of no service cuts or facility closures. Both also stressed that there are actual enhancements in transit, police, fire and paramedic services, along with a six-year pledge of $1 billion for road renewal.

These are all strong, well-presented arguments. But they do not change the fact they are trying to sell a budget that does not make life more affordable to a populace obsessed with affordability.

Why would Gillingham take such a risky approach? Given all the pressures he’s facing, there really isn’t any opportunity for him to kick this can down the road.

Why would Gillingham take such a risky approach? Given all the pressures he’s facing, there really isn’t any opportunity for him to kick this can down the road.

The city’s population grew by 65,000 people in the last three years and none of the current funding formulas set by the province or federal government are tied to population growth.

Provincial funding has increased modestly this year but there are very real concerns that federal funding could be greatly reduced in the very near future.

Conservative Leader Pierre Poilievre, poised to form government after next year’s general election, has signalled his intention to massively reduce transfers to municipalities for basic infrastructure and housing, arguing that local governments are bloated and wasteful.

“Municipal governments, don’t ever let them bulls—t you, are bursting with cash and they’re wasting it all,” he said in a recent interview with an Ontario newspaper.

There is nothing even remotely true about what Poilievre is saying. Municipalities may be somewhat wasteful — all governments are — but they are hardly swimming in cash.

A more accurate statement is that municipalities are struggling under the dual burdens of increasing populations and rapidly rising costs in providing services.

But in this political day and age, rational and factual are simply no match for bluster and hyperbole.

In this political day and age, rational and factual are simply no match for bluster and hyperbole.

Along with girding the city treasury for a cutback in federal funding, Gillingham might also be trying to piggyback this tax hike on an even larger property tax hike that the provincial government has planned for Manitobans next year.

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The former Progressive Conservative government launched an aggressive, multi-year effort to remove the education portion of property taxes. In its first two years, homeowners received enormous rebate cheques that profoundly lowered the total property tax bill.

The NDP government kept the rebate program intact after winning the 2023 general election, although it capped payments at $1,500. Now homes valued at $285,000 or less will effectively pay no education property tax, but those whose homes are worth more will see significant increases in total property taxes.

Gillingham and council could be wagering that they can slide a one-year 5.95-per-cent hike past homeowners who may have lost track of how much they are paying in property tax.

Put it all together, and this budget is very risky business. Exactly how risky won’t be known until the next municipal election.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.