City of Thunder Bay proposes 5.5% tax levy increase in 2024 budget

The City of Thunder Bay has released its proposed 2024 budget, with an increase of 5.5 per cent to the municipal tax levy.

The budget has yet to be approved by city council. Deliberations are set to begin at the end of the month.

During a media conference at city hall on Friday morning, Thunder Bay City Manager Norm Gale said while administration had initially proposed a levy increase of 6.6 per cent, council subsequently directed them to keep any tax levy increase to 5.5. per cent or less.

"That mandate has been achieved with this budget," Gale said. "There are no cuts to programs and services. In fact, there are investments, particularly in infrastructure."

Simply put, the tax levy is the amount the city needs from taxpayers to fund city services and capital infrastructure programs and is not necessarily a reflection of tax hikes facing taxpayers. Last year's tax levy was a 4.4 per cent increase, which came with a suite of cuts to staffing and services, and included a one-time infusion of funds from a reserve fund.

Gale said the city's total budget is about $538 million, with 43 per cent of that coming from the tax levy.

City Treasurer Keri Greaves said funding for community partners, including the Thunder Bay Police Service (TBPS), accounts for 30 per cent of the proposed tax levy increase.

The Thunder Bay Police Services Board is seeking a $54.6-million operations budget and a $2.8-million capital budget for the police this year.

Greaves said infrastructure investment accounts for 16 per cent of the levy increase, and the remainder of the increase is related to services the city provides.

"The proposed operating budget maintains core services while navigating fiscal, social and legislative challenges," Greaves said. "We're dealing with inflationary pressures across the organization on the various goods and services that we have to purchase to deliver the services.

"Some significant favourable budget variances include the organizational realignment, and service level reductions that were implemented this past year. User fees were examined across the organization and increased at least five per cent where applicable."

Other favourable impacts include a $1-million increase to the Tbaytel dividend, additional transfer payments from the province and additional income from interest, Greaves said.

But Greaves outlined some unfavourable impacts on the budget as well.

"Unfavourable impacts include increases from community service partners. We continue to see inflationary pressures on commodities and services, including road salt, paint, snow removal, parts and repairs and maintenance.

"Supply chain constraints are also a factor. Some specialized types of fleet are taking up to two years to come in from order to actual delivery, so that does affect our planning processes."

Review of municipal-provincial relationship needed

Gale said municipalities in Ontario are "on an unsustainable path."

"One way to look at this is that municipalities in Ontario do what they're told to do by the provincial government. And then there's a small basket of things that … municipalities are able to do because they choose to do that."

The model, Gale said, is not funded appropriately, however.

"The primary example of this is that property taxes are designed to pay for certain things, to serve and protect property and buildings. But a municipality today delivers so many things that have nothing to do with property and nothing to do with buildings.

"This is where grant funding is really important," Gale said. "Ontario in particular, and Canada as well, do provide grant funding to support municipalities in order to deliver these programs and services that are not designed to be funded by the property taxpayer."

And while that grant funding has increased, Gale said it's still insufficient.

"Fourteen per cent of our expenditures are dedicated solely to programs and services that are traditionally provincial responsibilities. Think health care. Think social services.

"What should happen is a review of the municipal-provincial relationship and the financial regiment of who does what, who pays for what, and how it gets done."

The full proposed budget is available on the city's website.

Next steps before budget is passed

This is the first budget to come after Mayor Ken Boshcoff gained strong-mayor powers from the province, which grants him more authority to act unilaterally during the budget process in an effort to build more housing. 

• You can get caught up with how last year's budget deliberations went here.

In the fall, Boshcoff issued a notice saying he does not intend to exercise strong mayor powers with respect to proposing and adopting the 2024 budget, delegating those tasks to Gale and Greaves, instead. However, he could always change his mind. The city must notify the public whenever the mayor puts his strong mayor powers to use.

There are a few key dates coming up before the ratification votes are held in February: 

• Jan. 23, when the city's long-term financial overview will be presented to city council. 
• Jan. 25, when a public Q&A session on the budget will be held at the Victoria Inn.

You can check back in with this story as we'll be updating it throughout the day with the latest information on the proposed budget.