Brandonites face large tax hikes in future

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This article was published 26/12/2023 (937 days ago), so information in it may no longer be current.

IT is a cautionary tale about the consequences of a decades-long budgeting approach aimed at keeping annual tax increases as low as possible. Those consequences, in the form of large tax and fee increases and delayed or cancelled capital projects, will be felt by Brandonites for years to come.

Earlier this year, the MNP accounting and consulting firm was hired by Brandon city council to review the city’s long-term finances and fiscal sustainability. On Dec. 15, city administration released a copy of MNP’s report, and it’s no exaggeration to say the impact has been tectonic.

The report concludes that the city will need to impose “extraordinarily” large property tax increases over the next decade in order to remain financially sustainable.

In support of that conclusion, MNP says that “tax increases have not been sufficient to reflect inflation and have resulted in diminished reserves at a time when Brandon requires significant investment in infrastructure”, and that “the existing funding and taxation plan will not sustainably fund capital growth and renewal, even in the near term.”

The report also provides a detailed road map of measures it says are required to increase the city’s revenues to a level that will enable it to cover its projected expenses over the next decade. In particular, it outlines two startling scenarios for raising property taxes.

Under the first option, city council would raise property taxes by approximately 13 per cent annually between 2024 and 2027, and approximately three per cent from 2028 through 2033. The second, alternative option is a decade of nine per cent annual tax increases, year after year after year, along with delaying several capital projects.

Under each of the two scenarios, home and business property taxes will have more than doubled by the 10th year.

The report also recommends increases in development fees levied on developers, a series of water and sewer rate increases, the implementation of drainage fees for commercial and residential properties, and higher fees charged at the city landfill site. That’s over and above the city’s PUB-approved plan to double current water and sewer rates over the next 16 months.

At a news conference following the release of the MNP report, Brandon city manager Ron Bowles called on the provincial and federal governments to pay their “fair share” in order to help Brandon dig itself out of the its financial hole.

Bowles may be right about the pain caused by the funding freeze, but every local government in the province experienced the same funding issues. And, as the report spells out in great detail, Brandon is very much the author of its own financial misfortune.

Indeed, its city council has failed (for more than a decade) to raise taxes at a level that would even keep pace with inflation. Even worse, reserves were consistently drained in order to further reduce tax increases.

By running so lean for so long, Brandon has neither the reserves nor the expected cash flow to pay for its expected operating costs over the next decade. That includes loan payments for the hundreds of millions of dollars of capital projects currently underway or expected in the coming years.

In response to public outcry over the impact of the suggested tax and fee increases – and perhaps to stave off a tax revolt – Brandon Mayor Jeff Fawcett and some city councillors have suggested that the MNP report is the “worst case scenario,” and that the proposed tax increases could be reduced by delaying or cancelling some planned capital projects.

That may sound good in theory, but the MNP report already recommended that some projects be delayed. Beyond that, the bulk of the capital spending is for projects already underway, with the rest for projects that are either unavoidable or sorely needed. Delaying those projects will only make them more expensive years down the road.

Even more importantly, the MNP road map would not eliminate Brandon’s massive (and growing) infrastructure deficit.

With city council’s budget deliberations only weeks away, it’s unclear how this situation will be resolved. Two things are obvious, however: First, Brandon has a looming cash crunch and no clear consensus on how to solve it.

Second, it’s about to become much more expensive to own a home or business in Brandon.

Deveryn Ross is a political commentator living in Brandon.

deverynrossletters@gmail.com X: @deverynross