Eye-popping Saskatoon budget update 'not the final number': city councillor
Dayne Patterson | CBC News | Posted: June 10, 2023 12:16 AM | Last Updated: June 10, 2023
Massive tax hike not the answer to $52.4-million city budget shortfall, critics say
The idea of an 18.56 per cent tax hike to cover the City of Saskatoon's budget shortfall is "unacceptable," says the federal director of the Canadian Taxpayers Federation.
"I don't know how taxpayers are going to afford something like that," Franco Terrazzano said on Friday, reacting to news of the city's $52.4-million shortfall for next year's budget and another $23.2-million forecasted shortfall for 2025.
On Wednesday, the city released a budget status update for its next multi-year budget, saying that without changes, the property tax would need to be hiked 18.56 per cent in 2024 and another 6.95 per cent in 2025 to cover the funding gap.
In a news release, the city cited inflation and lower post-pandemic revenues as reasons for the "unprecedented" revenue gap.
Terrazano pointed to the same inflationary pressures being why residents can't afford the "eye-popping" property tax hike.
"City councillors, they better be spending their summer months going line by line in the budget to find the necessary savings," Terrazzano said.
Jason Aebig, CEO of Saskatoon Chamber of Commerce, said while it's not abnormal to see high potential tax hikes in preliminary budget numbers, he found the figures "alarming."
"The magnitude of the tax hike — if nothing was done — would obviously overwhelm the vast majority of businesses," he said.
Aebig said he doesn't expect council to land on 18 per cent and said people shouldn't panic. He called on city council to consider investing in initiatives that expand the tax base, temporarily reducing operating hours for non-essential services, cutting unnecessary jobs and potentially increasing user fees in places where applicable.
He also noted a high property tax increase could lead to less spending from homeowners in the local economy.
'Irresponsible' to release preliminary figures: councillors
In a media briefing, chief financial officer Clae Hack said the administration is not recommending any specific budget cuts or property tax rate hikes at this point.
He said the biggest reasons for the funding gap are inflation, budget adjustments and the cost of city growth and expansion, including:
- Extending transit services;
- Base funding for future projects like an east leisure centre expected to open in 2029;
- Maintaining roadways, sidewalks and renewal of the city's fire truck fleet;
- Maintaining payroll costs.
"I think it was a little reckless of administration to throw those figures out there until some more work has been done to mitigate the impact of inflation and the other factors," said Ward 1 Coun. Darren Hill.
"They have put fear into many citizens of Saskatoon."
In the budget status update, Hack said the figures represent a "fully transparent view" of the financial pressures facing the city's budget next year.
It shows that key revenue streams — transit, parking and parking violations — are expected to be down $4.9 million from 2019 to 2024.
The city also won't receive the same pandemic-related federal funding it had in previous years, which included $10 million in 2023, after a slower-than-anticipated bounce back.
"We need to let our residents know that this is not going to be the final number," said Ward 5 Coun. Randy Donauer.
Donauer was disappointed the city administration didn't release a plan alongside the preliminary budget figures and said people are angry and advocating for no tax increase.
Neither he nor Hill settled on a rate increase they were comfortable with, but Donauer said the rate of inflation was a good starting point. Both called it "irresponsible" for city administration to release the numbers.
City council's governance and priorities committee will consider the 2024/2025 budget status update information report next week.
Hill wants city council to commit to looking at every business line and consider cutting full-time positions. Donauer said the municipality is tasked with providing core services including streets, sidewalks, parks, sewer and garbage but other services are on the chopping block.
"It would be nice to have, but some of those things we're going to have to do when we can afford it," Donauer said of programs and services outside the core.
City council will finalize the budget in November.