Property tax hike little more than a payday loan to keep broke city’s lights, heat on

Opinion

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This article was published 12/12/2024 (268 days ago), so information in it may no longer be current.

The official line from the City of Winnipeg is that the 5.95 per cent property tax hike proposed in this week’s budget is a one-off. The city says it plans to return to annual tax increases of 3.5 per cent in 2026 and 2027. That’s a pipe dream.

Unless the provincial government comes to the table with a new funding/revenue model for the city, there is no way that will happen — not unless the city does far more to cut costs or increase revenue streams elsewhere, or both. In fact, it could be higher than 5.95 per cent in future years if nothing changes.

Mayor Scott Gillingham and finance committee chairman Coun. Jeff Browaty unveiled the 2025 budget Wednesday. As expected, property taxes will rise beyond the 3.5 per cent Gillingham promised voters in the 2022 civic election. They had little choice. Even with the increase, the city’s financial situation remains dire.

There are few contingencies in the budget for surprise cost increases, which will almost certainly arise. And the city’s financial stabilization reserve, which will be depleted this year to cover the 2024 deficit, is projected to be a paltry $4 million by the end of 2025.

The city is broke and this week’s proposed tax hike will do little to change that.

The city could do a better job of managing spending. The 2025 budget was disappointingly weak on cost controls. It focuses primarily on expanding services.

Overall spending in the tax-supported budget is up 4.7 per cent in 2025 compared with 2024 — a bit steep considering the city’s fiscal challenges.

Most of that is to pay for 115 new full-time equivalent staff. While some of that is in police (six general patrol officers, with another 30 coming in 2026 and 2027) and fire-paramedic (24 firefighters for Waverley West), most are in other departments such as public works, community services and planning, property and development. The city is adding 14 full-time equivalent positions to expand library hours and services. That’s a great benefit, but can the city really afford it?

The city’s total salary and benefit costs are projected to rise by $53.7 million in 2025, a 5.3 per cent increase over 2024. For a city that has drained its financial reserve and has no real plan to replenish it, that seems awfully high.

Worse, the city is planning to add a total of 226 full-time equivalent employees to its payroll over the next three years, according to the budget. That would increase total salary and benefit costs by $129 million, a 12.7 per cent increase from 2024 to 2027.

There is some spending-control language in the budget. But most of it is vague goals about identifying savings and efficiencies.

One concrete plan to save money is to implement a pilot project to clear streets after 15 centimetres of snow has fallen, up from the current 10. That’s a service cut, even though the city claims there are no service cuts in this budget. It was a bad choice for a city that already does bare-bones snow-clearing.

Some of the cost controls in the budget are only temporary, including $20.5 million in “vacancy management” — a delay in filling existing city jobs. That only kicks the can down the road and doesn’t solve the city’s long-term fiscal problems.

It was also disappointing that the city is proposing to freeze business property taxes while residential property owners, including low-income ones, bear the full brunt of the tax hike. The tax pain should have been spread more evenly.

As the Social Planning Council of Winnipeg said this week, there should have been accommodation made for low-income property owners in the form of a rebate. It’s hard to see the fairness in freezing taxes for businesses, especially large ones, and hiking them for pensioners and others on fixed-incomes.

Still, the financial problems can’t be solved through spending controls alone. It would help if the city did a better job of managing costs; it’s a little surprising it hasn’t, considering both Gillingham and Browaty are self-professed fiscal conservatives. But it wouldn’t change the reality that even a 5.95 per cent property tax hike will make little difference in the long run to the city’s bottom line.

Gillingham and Browaty acknowledge that in the budget.

“With the financial stabilization reserve expected to be depleted by the end of 2024, the 2025 property tax increase is a necessary step to close the gap,” they wrote. “However, this alone won’t be enough. The city will also require additional support from both the provincial and federal governments to fully address these financial challenges.”

This problem isn’t going away anytime soon, even if the 5.95 per cent tax hike is extended for the next several years. The city can’t operate under the status quo.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom Brodbeck is an award-winning author and columnist with over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.

Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are 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.