City of Yellowknife proposed budget includes 8.5% property tax increase

Administrators at the City of Yellowknife say that the city will have to raise taxes by nearly 8.5 per cent next year if it is going to meet city council's current goals without cutting services.

Top bureaucrats said that the city's aging infrastructure, expanding mandate and previous budget cuts have put pressure on the system. 

"If 8.48 [per cent] is not palatable, then something's gotta give," said city administrator Sheila Bassi-Kellett to reporters in a technical briefing after the 2020 draft budget was released on Monday. "There will be some things council's going to think long and hard about."

Revenue shortfalls

In addition to the tax increase the city administrators say that they'd need to increase rates on water bills, tipping fees for solid waste management, and user fees for government facilities by between 3 and 3.5 percent annually over three years.

Sharolynn Woodward, director of corporate services, told city council that by the Northwest Territories government's own calculations, it is underfunding municipal and community governments by about $40 million a year. In Yellowknife alone, the gap between what the city gets and what it needs is $11.4 million annually, she said, although 2019 was a "bit of an anomaly"

"We did receive a one-time extra gas tax payment," she said. "It was an election year." 

A request for comment from the territorial Department for Municipal and Community Affairs did not get a reply by publication time. 

In a scrum with reporters, Mayor Rebecca Alty said that she's hoping to meet the incoming ministers for finance and municipal and community affairs when their portfolios are assigned, and push them to raise their funding. 

"Our water, our roads, our sewer, it's not fluffy stuff … we've got to be able to maintain a lot of assets," she said, adding Yellowknife is one of several territorial communities that are underfunded. "It has an impact on a lot of us."

Past low property taxe increases may have also contributed to the proposed tax hike now. In 2000, council decreased taxes by two per cent, followed by four years of zero per cent increase, said Woodward. Woodward noted that Moody's credit rating suggested that the widening gap between Yellowknife's tax rates and its services will make it riskier to lend to. 

Spending on the rise

Woodward said that while money is becoming tight, the city is also expanding its mandate — a challenge for city administration.

In recent years the city has offered funding for the day shelter and hired a homelessness co-ordinator, and has funded street outreach and homelessness employment programs. Yellowknife is expected to spend less than $600,000 annually on social programs for the city's most vulnerable over the next three years, but Woodward warned that "these initiatives, while worthwhile, come with costs — costs that are borne by the city for responsibilities outside our mandate." 

And the city plans to build a new pool, which will cost tens of millions of dollars.

Woodward said while cancelling the pool could keep taxes down in future years, it wouldn't put a dent in the tax increase equation for 2020 — because the aquatic centre's first year of construction is being funded by grants and pools of money reserved for capital projects.

Looking for solutions 

Woodward emphasized that she wasn't telling council what to do.

Instead, the budget is a "realistic and transparent reflection of what it will take to do everything that council has laid out," she said. "If administration had come forward with an austerity budget that incorporated service reductions and project delays, it would have been inappropriately making decisions on council's behalf."

Counc. Robin Williams told CBC that he'd be looking for "opportunities for savings" in the draft budget.

At the same time, he said, "there has been a number of years where we didn't do tax increases ... government itself does need to grow and evolve as more services get added."

Mayor Alty said that she'd be talking to residents and looking closely at the budget to see if there were any "ways we can try to multi-solve, to solve two problems with one solution."

She acknowledged to reporters that the tax increase was higher than usual, but also added that homeowners should use Yellowknife's property tax calculator to inform themselves about the actual impact on their pocketbook before they make a decision on what they want to see next. "With the pool coming in ... do we want to add a new facility or keep what we have?"