City of Winnipeg making 'tough decisions' to hold the line on 3.5% property tax increase

The chair of Winnipeg's finance committee hopes residents see their priorities reflected in the budget set to be released on Tuesday.

But while Coun. Jeff Browaty says city departments went to great effort to maintain services while minimizing the financial burden on taxpayers amid rising costs, one expert warns the city's lack of income will mean cuts down the road.

The preliminary budget will be tabled during a special meeting of the executive policy committee Wednesday afternoon at 2 p.m.

Mayor Scott Gillingham has already committed to increasing property taxes by 3.5 per cent.

At the same time, the city is facing financial pressure on virtually everything it spends money on, including wages, construction materials and fuel, Coun. Jeff Browaty says.

"There's not a lot of new additional money," he said.

"We asked the departments to get out their pencils and figure out every opportunity to minimize the impact of inflation and try to minimize any impact that would have on the delivery of services to Winnipeggers."

Winnipeg's situation is not unique. 

Brandon city council passed a budget over the weekend that increased municipal taxes in Manitoba's second-largest city by 9.4 per cent. 

Browaty says Brandon's tax increases in recent years have been below Winnipeg's, but acknowledged "tough decisions were made throughout the whole process."

Winnipeggers should not expect to see major funding commitments to large capital projects such as the expansion of Kenaston Boulevard, the extension of Chief Peguis Trail or the Arlington Bridge replacement, Browaty said.

Last month, following a confidential budget briefing, Coun. Russ Wyatt told CBC News the city planned to increase departmental budgets by two per cent, which effectively amounted to a cut, because it falls below the rate of inflation.

Browaty does't deny the accuracy of the figure Wyatt cited, but says it doesn't take into account increases to wages set out in collective bargaining agreements, the largest driver of increased costs at the city.

Inflationary pressures

University of Winnipeg politics professor Aaron Moore says it will be difficult for the city to maintain a 3.5 per cent increase for the remainder of this council term, as Gillingham has committed to do.

"I really can't conceive of a way that a 3.5 per cent increase … is going to be adequate to just deal with basic inflationary pressures on the budget," he said.

The city froze property taxes from 1998 until 2012, and subsequent increases have not kept up with inflation.

"Winnipeg is in a much worse position than a lot of other municipalities across Canada already because of that," he said.

Last month, the latest budget update for 2023 predicted a deficit of $7.1 million.

The city is legally required to balance its budget each year. Cost overruns in recent years have left little money in its fiscal stabilization reserve.

The city has kept tax increases low in recent budgets by reducing the amount of money it transfers to capital projects from its operating budget, falling to $6 million in 2023 from $86.5 million in 2022.

One option would be to increase the amount it transfers from the money collected through water and sewer rates over to the operating budget, currently at 11 per cent of the water and waste budget.

However, unless other levels of government of step in with some form of revenue sharing or increases to transfer payments, the city's planned 3.5 per cent tax increases will "lead the city to make cuts that eventually will become apparent to the public, even if initially they're unseen," Moore said.

Browaty said the city is continuing to negotiate with the provincial and federal governments, and he is seeing "good signals" from both, although no commitments have been made.

After the tabling of the budget, departments will make their submissions to council's standing policy committees. 

Public hearings for members of the public to make delegations and argue for changes to the budget will begin March 1. Council will consider the final budget on March 20.