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Yellowknife Chamber of Commerce reacts to city's 'cautious budget'

Yellowknife city council will vote on the 2022 budget Monday evening. The proposed budget involves a 5.56 per cent property tax increase.

City council will vote on the 2022 budget, including a 5.56 per cent property tax increase, on Monday evening

Yellowknife city council will vote on the 2022 budget which proposes a 5.56 per cent property tax increase. (Michael Hugall/CBC)

Yellowknife property taxes are expected to increase by 5.56 per cent when city council votes on the 2022 budget on Monday evening. 

COVID-19 uncertainties, inflationary pressure and lower user fees were cited as some of the reasons for a property tax increase in a presentation by city staff to council. 

The city also has some significant new projects such as a new aquatic centre, with a total cost of almost $68 million, although some will be paid for by federal revenue streams and loans. There are also other new allocations going toward other priorities of council such as $150,000 toward reconciliation, $10,000 of which will go to the elder in residence program at the library.

The initial tax rate presented to council was significantly higher, at 13.44 per cent. It is common for initial budget proposals for the city to be higher than what is accepted by council by the time the budget is voted on.

During budget deliberations last week, council passed several motions to reduce the tax burden on the people of Yellowknife.

Of greatest significance, council passed a motion to reduce the balance sitting in the general fund by $2 million.

The general fund is used for the provision of day-to-day services such as fire, ambulance, parks, recreational facilities, transit, roads and sidewalks. Typically, about 75 per cent of the money needed to provide these services comes from property taxes, while user charges contribute most of the balance.

This decision allowed council to spread out a property tax increase, which could result in a 5.56 per cent increase in 2022. But it means a 9.57 per cent tax increase in 2023 and a 2.64 per cent increase in 2024. 

Reducing the balance of this fund means that Yellowknifers pay less in taxes, but amounts to a smaller rainy day fund.

Sharolynn Woodward, director of corporate services for the city, said this one time move would be considered "prudent for current fiscal realities."

All municipalities must balance their budgets.

Council is expected to approve the final budget at the meeting on Monday. 

Yellowknife Chamber of Commerce reacts 

Robert Warburton, president of the Yellowknife Chamber of Commerce, called it a "cautious budget," noting that it reads as though council is trying to be ready for a worst case scenario based on revenue projects. 

He said he was glad to see the city dip into reserve funds. The chamber called for the deployment of some of these funds multiple times over the course of the pandemic.

Warburton said he is  happy to see the property tax rate come down from its initial figure and understands the city is under challenging circumstances, but he adds it might not be enough.

"Some businesses really cannot absorb much more — it might be the last bit that throws them over," he said of the property tax increase. 

The chamber is also recommending an external finance committee, composed of community groups and businesses who might offer council a different lens to contemplate efficiencies and cost saving measures, he said.

Rylund Johnson, MLA for Yellowknife North, said he was "not at all surprised" by the tax increase, which he said only needed to be contemplated due to the gross underfunding of communities by the territorial government.

Johnson recently voted against the territorial government's budget which removed $2.5 million of funding for communities, despite the overall territorial budget being a larger capital budget than usual. The territorial budget passed.

Sara Brown, CEO of Northwest Territories Association of Communities, said the funding gap from the territorial government to municipalities is quite large, citing an average of 37 per cent of underfunding, in spite of an agreed upon funding model between the territory and communities.

She said each year municipalities are doing a balancing act and must decide to reduce services, delay projects or raise taxes and fees. This year, with much being closed, user fee revenue for many municipalities were low and communities which had a containment order were particularly impacted, she said. 

Council's decision to make

When asked about the underfunding of communities by the territorial government, Jay Boast, a spokesperson for the Department of Municipal and Community Affairs (MACA), said "[it] continues to work with all levels of government to seek funding to address the gap, and to find ways to either increase revenue generation or reduce operating costs."

The territorial government works with communities to assist them in accessing the federal government's infrastructure programs, he said.

Yellowknife will have been allocated over $50 million in funding between 2016 and 2026 for investment in their transit, water and sewer, roads, recreation and solid waste infrastructure from this pool, he said.

MACA has a number of tools to assist communities with difficult budget planning decisions, he said, but these decisions ultimately fall on Yellowknife's city council. 

ABOUT THE AUTHOR

Clara Pasieka is a CBC journalist in Toronto. She has also worked in CBC's national bureau and as a reporter in the Northwest Territories, Ontario and New Brunswick. Her investigative work following the Nova Scotia Mass Shooting was a finalist for a CAJ Award. She holds a Masters degree in Public Policy, Law and Public Administration from York University.

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