Saint John property tax increases to hit residents, but spare industry in 2024

A Saint John City budget for 2024 that will require residential property owners to pay $8.5 million more in property taxes, while large industrial properties pay less, is being blamed on provincial tax rules that limit how much municipalities can charge businesses.

It's also reigniting debate in Saint John over whether industry pays enough to support city services. 

"Heavy industry next year will actually be paying less than the year before, overall, because we don't have the tools to do anything else," said finance committee chair Gary Sullivan in a CBC interview last week.

"We would love to level the playing field so that everybody's paying a fair share.'

In a budget meeting earlier this month, city finance commissioner Kevin Fudge said a proposed $8.5 million increase in property tax revenue, needed to cover rising costs in 2024, will have to be paid for entirely by residential taxpayers because of a hard ceiling imposed by the province on how much large and profitable businesses in the city can be taxed.

"The residential class is funding 100 per cent, actually 100.27 per cent, of the overall property tax revenue increase," Fudge told the finance committee.

"We recommend continuing advocacy efforts with the provincial government to obtain more flexibility." 

In 2024, Saint John residential property owners are facing a 12.4 per cent increase in the taxable value of their lands and buildings, caused by rising real estate prices and reflected in provincial assessments.  

However, those escalating values are not being matched by business properties, which have increased in value by only 2.5 per cent, according to provincial assessors, including just 0.4 per cent for the city's large industrial facilities. 

Saint John plans to cut its tax rate enough to save taxpayers $3.8 million on increases caused by the rising assessments, and it wants to direct all of those savings to residential property owners who are the most affected, but provincial rules do not allow that.  

Instead city tax cuts have to be shared in proportion among all properties.

Residential property owners, who were facing a tax increase of $10.9 million in 2024 because of their rapidly rising assessments, will receive $2.4 million of the tax rate cut and in 2024 will pay $8.5 million more than this year.    

Business properties, which were facing a $1.4-million tax increase because of sluggish assessment growth, will nevertheless get $1.42 million in tax rate cuts and as a group pay $23,000 less than last year. That includes a $270,000 tax increase on commercial properties and a $293,000 tax decrease on heavy industrial properties.

"We believe more flexibility is merited," said Fudge, about the city being forced to shift tax rate cuts it wants to deliver to residential properties to business properties instead because of provincial tax rules.

City politicans want more say

Most Canadian municipalities have the authority to set multiple tax rates and move each of them independently to target tax increases and decreases, and Saint John politicians have long expressed an interest in doing just that with its largest businesses, including the Irving Oil refinery.

Across North America, annual property taxes on oil refineries of $50 per barrel of their daily refining capacity and above are common, including among facilities in Texas, Illinois, New Jersey, Louisiana, Alberta and British Columbia.  

Several of those pay property taxes that are more than $100 per barrel of their daily capacity.

By contrast in Saint John, the Irving Oil refinery pays property taxes of about $20 per barrel of its daily refining capacity of 320,000 barrels.

That property tax bill isn't just low by North American oil refining standards, it is also lower than what several other industrial facilities in New Brunswick pay.

N.B. Power's Point Lepreau, Belledune, Coleson Cove and Bayside generating stations produce $1.2 billion worth of electricity per year as a group and pay a combined $17.5 million in local and provincial property taxes.  

Property taxes on the Irving Oil refinery are one-third of that amount, even though the annual value of the refinery's petroleum production is 10 times what the four power plants produce.

Saint John hasn't said how much it would reshuffle the property tax burden in the city among people, businesses, industry and other groups if given the chance, but it wants the authority to make those decisions for itself.

"We would really like to have no restrictions and set what we want to set," Fudge told councillors at the meeting. 

"We would like the ability to set as many classes as we want and set the rates the way we want, based on what works for the City of Saint John."

Prince George, B.C., is one of a number of Canadian cities with a large industrial base that imposes special rates on its biggest facilities.

The city hosts pulp and paper mills and a small oil refinery and employs nine separate property tax categories. In Prince George, heavy industry is subject to a tax rate seven times higher than residential properties.  

New Brunswick municipalities are currently not permitted to tax any business properties, including industrial properties, more than 1.7 times what residential properties are charged.

Premier Blaine Higgs did promise in the 2018 provincial election to "empower municipalities to have greater control over their own affairs including greater powers over taxation" but progress has been limited.

A plan to have a new fiscal arrangement in place for communities by January 2025 has not been discussed in detail.

Dan Murphy. executive director of the Union of the Municipalities of New Brunswick, said Saint John is not alone in wanting major changes in how communities are allowed to fund themselves.

"I think all municipalities are impatiently waiting for those discussions to start," said Murphy.