July 14, 2020

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Civic budgets show results of trickle-down cutbacks



Hey there, time traveller!
This article was published 22/11/2017 (964 days ago), so information in it may no longer be current.

Mayor Brian Bowman warned us it would be tough. And in this instance, he was true to his word.

The 2018 operating and capital budgets, tabled Wednesday, are a symphony in old-fashioned, belt-tightening austerity.

Overall spending is up just 1.2 per cent. That is below the rate of inflation and, in almost every empirical measurement, a virtual cut in spending from the previous year. Although some priority departments are going to see that full increase - like the Winnipeg Police Service - the budgets of many others are flat or cut back.

You name it, and the city is essentially cutting back. Library funding is flat, along with departments or services such as parks and recreation, insect control, animal services, planning, arts and cultural grants and heritage conservation. In a stunning move, the budget for the Winnipeg Fire and Paramedic Service was actually cut by 2.9 per cent.

All that and the city is still raising property taxes by 2.33 per cent, along with hikes to transit fares and a range of fees and surcharges.

In comments to reporters, Bowman seemed almost apologetic about the need for austerity. Although he hasn't committed to running for a second term - most observers believe he will - the mayor was clear that this budget isn't what you'd normally expect from politicians facing re-election in one year.

It's true that governments at all levels tend to front-end load bad budgetary news in the first couple of years of their mandates, hoping to deliver some sort of dividend to taxpayers in the final year, right before everyone heads back to the polls. However, with a sluggish economy and anemic government revenues, it's unlikely we'll see that tradition at any level of government for the foreseeable future.

Why did Bowman go austere in this, the last budget before he may face re-election? Largely, Bowman's fiscal fate was sealed some time ago by decisions made by the province and, indirectly, by the federal government.

Fighting a chronic budget deficit, Premier Brian Pallister is strangling most major streams of provincial expenditure. This has included cutbacks in funding to municipalities, both on the operating and capital side of the equation.

The premier has made the point - and it's a good one - that part of the reason why he has been forced to cutback has been decisions made in Ottawa to limit the growth in health care transfer payments. Pallister has been clear that the decision to apply a smaller escalator to increases health transfers is tantamount to a funding cut.

Part of the way Pallister has chosen to deal with Ottawa's cold-hearted decision is to pass on the same fiscal bad news to Manitoba municipalities.

There is a $10-million reduction in support for Winnipeg Transit, cuts to grants for road renewal and a refusal to cost-share certain infrastructure projects that are eligible for federal funding. The city cannot say with certainty exactly how much it has lost from provincial funding decisions - money flows in different ways, at different times of the calendar and fiscal years - but it's definitely less.

Members of the Tory government will deny that they have any culpability for the city's fiscal woes, and wag a finger at Bowman for failing to get his fiscal house in order. That is a convenient but mostly unfair allegation.

The city has been on a fairly tight fiscal leash for many, many years. It currently employs half the number of managers it did 20 years ago, despite the fact that the range of services and the population it serves have both grown exponentially. Take away the police service, and you'll see virtually no growth in non-management employees. Total staffing is cut even lower by the fact the city refuses to fill hundreds of open jobs as part of its aggressive vacancy management strategy.

As for expenditure control, it's important to remember that the city is essentially in the business of maintaining infrastructure, and the cost of repairing streets, bridges, lanes and sewers has grown by leaps and bounds. A civic official noted that the Charleswood Bridge in west Winnipeg cost about $12 million in 1995. Just 20 years later, the city is looking at estimates for the replacement of the Arlington Street bridge that run as high as $300 million. That's a 2,500-per-cent increase in total costs for projects of similar scope.

The rising cost of infrastructure repairs and replacement make it very hard for any civic administration to keep a lid on taxes. Largely, Winnipeg has done a good job of keeping property taxes competitive, although we're still a little on the high side. Unfortunately, while it pursues a balanced budget, the province has essentially absolved itself of any responsibility for keeping property taxes under control.

By cutting back on funding to municipalities, and flatlining support to the public school system, Winnipeggers are experiencing property tax increases the likes of which haven't been seen in this city since the early 1990s.

The province is not wholly responsible for the financial woes facing the city. But it does have a role to play in the solution.

The city needs new sources of revenue. Bowman took a step in the right direction this year by implementing a new development fee, which is expected to bring in an additional $11 million next year. That is equal to a two-point property tax hike.

But the city needs more help on the revenue side. A share of carbon reduction and cannabis tax revenue - both of which will come on line next year - is a must. But it may not be enough; the city and province have to look at municipal gas or sales tax levies to relieve the pressure on property taxpayers and give the city a fighting chance to maintain service levels.

The city and province are both suffering impacts from downloading; the former because of the latter, and the latter at the whim of the federal government. That common experience should be a good excuse to get together and figure out how to make government work better.

Right now, at both levels of government, we're paying as much or more in taxes and getting increasingly less in services. And that can't go on forever.


Dan Lett

Dan Lett

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

Read full biography


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