Municipal leaders in Saint John are awaiting word from the provincial government on a proposed plan to pay down the huge deficit owed to the city's employee pension plan.

Saint John politicians are asking for terms that would allow the deficit, which was recently measured at $129 million, to be paid off over as long as 25 years.

Provincial rules do not permit terms longer than 15 years currently.  City taxpayers have a lot at stake in the provincial governments decision.

Without the relief, Saint John may be forced to hike property taxes in the city which already has the highest tax rate in New Brunswick — 1.78.5 cents per $100 of assessed value.

This isn't the first time Saint John politicians have been waiting for word on possible help from the provincial government.

Saint John had been hoping for pension changes earlier this year, but in June Finance Minister Blaine Higgs asked the municipal government to modify its proposal.

The city is already struggling to keep its tax rate in check despite a downturn in new residential construction that will likely limit growth in the assessment base.

Total Tax Assessment Base (Assessed value of buildings, property)
CityAssessment base
Saint John$5,866,000,000
Fredericton$5,561,000,000
Moncton$5,906,000,000

Saint John is also about to absorb the cost of Peel Plaza, a new police station, parking garage and public courtyard costing $42 million.

Pat Woods, city manager, told councillors last year the project could add one to three cents to the property tax rate unless there is healthy assessment growth or spending reductions elsewhere.

Gerry Webster, a developer and real estate broker, said he believes that a substantial tax hike is unavoidable.

"I said quite a while ago, I made it public, that I felt that tax rate will have to go up 20 cents over $2,"Webster said.

"And I think that's a reality. I just dont think its been faced yet."

Councillors debate tax hike

Coun. Stephen Chase, the city's deputy mayor, also said he predicts a tax hike, although not as dramatic as the one forecast by Webster.

He said it is too early to predict how much additional revenue will be needed.

Coun. Gary Sullivan said the talk of a property tax increase is premature.

"We can't, we won't increase the tax rate," Sullivan said.

Tax Burden by number of dwellings
Saint John$1,648
Fredericton$1,984
Moncton$1,923
Source: Slack and Kitchen report

"So we've got to find it either in cuts or, you know, holding off on spending on some of the things that we really want to do for the city, whether it be reconstruct roads or increase recreational infrastructure, those sorts of things," Sullivan said.

In the meantime, the city's finance commissioner is rejecting claims Saint John property owners carry a heavier tax burden than their counterparts in Fredericton and Moncton.

Greg Yeomans cites a 2009 report by Ontario-based consultants Enid Slack and Harry Kitchen that shows lower home values in Saint John keep assessment rates, and property taxes, below those in the other cities.

The report divides the total assessed value of all dwellings owner occupied and residential by the number of dwellings in each city. By that analysis the inhabitants of each home in Saint John carry a property tax burden of $1,648.

By comparison, the tax burden in Moncton is $1,923 and in Fredericton $1,984.

Statistics released by the Canadian Real Estate Association show the average price of a Saint John home sold in July was $157,000. That would come with an estimated tax bill of $2,500.