Saint John city managers are warning that a declining population and near zero assessment growth, have created a grim financial outlook for 2018 and beyond.

Councillors were warned Tuesday night, the city will be required to impose a stiff tax hike or make serious cuts to service.

The hard facts were delivered by Kevin Fudge, the city's finance commissioner, who anticipates assessment growth of only half of one per cent going into 2018.

At the same time the city's decline in population will likely result in a $3 million reduction in the province's annual unconditional grant next year.

"The city can no longer hold the tax rate and maintain existing services and infrastructure," said Fudge.  

"Our expenses exceed our revenues."

Small interest for tax increase

With the current economic landscape, Fudge says the city will have to raise the property tax rate by 6.7 cents in 2018 just to maintain current service levels.

There's little appetite for a tax increase among councillors. But they also need to find ways to make the city more attractive to newcomers.

'I personally don't support tax increases I just think it's a death blow for the city.' -Mayor Don Darling

"It's going to be very difficult, we still have to provide service," said Deputy Mayor Shirley McAlary.

"You're not going to just cut off service and expect all the other people to move into Saint John, because it's just not going to happen."

Mayor Don Darling says he's glad city staff aren't trying to sugar coat the situation.

don darling

Saint John Mayor Don Darling. (CBC)

"I personally don't support tax increases I just think it's a death blow for the city," he said. "So it's going to be cuts, it's going to be adjustments."

In his report Fudge also warned the city is investing less than half the money required to maintain its aging infrastructure.

He's recommending councillors do whatever is required to balance the budget in 2018 and then work towards the creation of a long term financial strategy.