March 26, 2019

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Opinion

Save some anger for the premier

Premier Brian Pallister's financial strategy will ultimately lead to tax and fee increases at the municipal level. (Mikaela Mackenzie / Winnipeg Free Press files)</p>

Premier Brian Pallister's financial strategy will ultimately lead to tax and fee increases at the municipal level. (Mikaela Mackenzie / Winnipeg Free Press files)

To fully grasp the challenge being faced by Winnipeg Mayor Brian Bowman in the 2019 operating and capital budgets, you need to go back to 1993.

In the spring of that year, then-premier Gary Filmon introduced an austere budget that included a number of cuts to Manitoba's core services. Also included was a major cut to the provincial property tax credit, which dropped to $250 from $325.

That meant a $75 increase to every homeowner's property taxes — even before municipalities and school divisions set their tax rates.

As you can imagine, taxpayers reacted swiftly and angrily; however, rather than direct their anger at the province, the contempt was focused almost solely on city hall.

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To fully grasp the challenge being faced by Winnipeg Mayor Brian Bowman in the 2019 operating and capital budgets, you need to go back to 1993.

In the spring of that year, then-premier Gary Filmon introduced an austere budget that included a number of cuts to Manitoba's core services. Also included was a major cut to the provincial property tax credit, which dropped to $250 from $325.

That meant a $75 increase to every homeowner's property taxes — even before municipalities and school divisions set their tax rates.

As you can imagine, taxpayers reacted swiftly and angrily; however, rather than direct their anger at the province, the contempt was focused almost solely on city hall.

Councillors were inundated with phone calls from furious homeowners, wondering how they could jack up property taxes in such a sudden and unfair manner. It mattered little to those calling that it was the province, and not the civic government, responsible.

Flash forward to Friday, when Bowman revealed the draft capital and operating budgets for 2019.

Included in those documents was a modest 2.33 per cent property tax hike, exactly what Bowman had promised in last fall's civic election, although there is a $42-million cut to street and road-renewal spending: a 32 per cent decrease from the previous year.

The latter is unlikely to make Winnipeg citizens happy; road and street repairs are among the most popular things a city government can do. Bowman argued he was faced with either an enormous tax increase — perhaps as much as 10 per cent — or a significant cut to capital spending.

The mayor chose the latter.

It's at this point we can see why the Filmon-era experience is so relevant. Bowman argued — and with good reason — the city was forced to cut infrastructure spending because the Progressive Conservative government of Manitoba had continued to cut capital grants.

The province hasn't tabled its budget for this year, but the City of Winnipeg has already been informed money it was expecting for roads and streets would not be available. Although the details of how much less is coming the city's way is still in dispute, it is likely to be tens of millions of dollars.

Mayor Brian Bowman argued he was faced with imposing a large property tax increase on citizens or cutting capital spending in the city's latest budget. (Mikaela Mackenzie / Winnipeg Free Press)</p>

Mayor Brian Bowman argued he was faced with imposing a large property tax increase on citizens or cutting capital spending in the city's latest budget. (Mikaela Mackenzie / Winnipeg Free Press)

When you consider the province has frozen its operating grant to the city for the third year in a row, you can see at least some justification for Bowman's decision to cut spending on roads and streets.

Of greater concern for city council is the fact many members of the public concerned about the state of the aforementioned roads and streets will not send angry letters to Premier Brian Pallister's office on Broadway. The anger over this decision will be fully and completely focused on Winnipeg city hall.

Pallister is no doubt aware of this. He and his cabinet ministers have unleashed a concerted social media campaign arguing, despite the fact the city is bloated and hoarding money in reserve accounts, it already receives more money per capita than any other city in the country.

The figures used by the Pallister gang to disparage Bowman and council are incomplete, deliberately miscommunicated hogwash, but then again, this misinformation can be effective in a scenario where residents are already predisposed to hold the city to account on decisions related to infrastructure and services.

By now, just about every municipal official in Manitoba knows what the Tory government is doing.

Firmly stationed on the downward slope headed towards the fall 2020 election, Pallister and his Tory team are working diligently to get as close to a balanced budget as possible so they can deliver a one-point cut to the provincial sales tax.

That is no small order. One percentage point of PST equals roughly $350 million in income for the province. Unless the budget is near-balanced, if not approaching surplus, Pallister will have to make the risky decision to borrow and increase the debt to deliver a tax cut.

To avoid that, he is strangling all forms of government expenditure.

Health and education are precariously close to frozen. Investments in provincial highway infrastructure has been significantly cut. Hundreds of millions of dollars in cost-shared funding is in limbo because Manitoba does not want to contribute its share. There has been a blanket freeze in grants to municipalities.

Pallister and his ministers can try to cook the numbers anyway they want, but it doesn't change the fact their fiscal policies are going to lead to tax and fee increases at the municipal level. No way to avoid it.

Bowman ultimately has to be held accountable for the overall strategy in the civic budget. His decision to avoid a bigger property tax hike is designed, in part, to divert attention for the cuts to road and street renewal to the province. From a fiscal point of view, he could have increased taxes a wee bit more than 2.33 per cent and used that money to backfill provincial cutbacks. But he didn't.

Bowman knows, during this civic budget process, he may only get one chance to hold Pallister accountable for the cuts to municipal grants. He must connect the dots for ratepayers, and hope Winnipeggers save some of their anger for the premier.

Otherwise, he'll have to watch helplessly as Pallister celebrates his PST cut with the knowledge it was made possible, in part, by a precipitous increase in the number of potholes on Winnipeg streets.

dan.lett@freepress.mb.ca

Dan Lett

Dan Lett
Columnist

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.

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