In a bid to lower the tax hit in the new year, Mayor Don McIsaac proposed redirecting $2 million in city funds – slated for city reserves – to lower the 2025 tax levy.
The idea, brought forward by the mayor during Tuesday’s capital budget discussions, and ultimately shot down by council, could have reduced the city’s projected 5.42 per cent tax hike by nearly 3 per cent.
McIsaac suggested that in lieu of funding the city’s general asset management reserve, which has a $12.7 million contribution slated for 2025, $2 million of those funds should be used to offset the tax levy next year.
“I think we need to be accountable to taxpayers,” the mayor said during the discussion. “I don't know many taxpayers that have got a 5.42 per cent (wage) increase this year. A lot of them are on fixed income, and they have significant struggle here.”
The projected 5.42 tax increase comes largely from external pressures, with the OPP and County of Simcoe hikes accounting for 5.04 per cent of the increase.
Council has spent budget deliberations whittling its own contribution to the tax hike from 1.9 per cent (that would have translated into a total 6.94 per cent increase) down to the .38 per cent figure (for a total 5.42 per cent increase) it currently sits at.
For some members of council, a 5.42 per cent tax hike is an acceptable figure – especially considering the city’s need for reserve funds to forward capital projects over the next 10 years.
In June, city staff reported the 10-year capital and reserve forecast projects city reserve balances potentially declining to negative $254 million by 2034, with 687 possible capital projects – totalling $789 million – forecasted over that span.
“When we were at 6.9 (per cent), I was floating an idea of reducing our contribution by 25 per cent under one of those columns, but we're down to 5.42 (per cent) and I'm quite OK with that,” said Coun. Tim Lauer.
“If you average over the last five years, tax increases in this town, it comes out at about 2.58 – that is reasonable, in my opinion," said the long-time Ward 4 councillor. “I think anything we do in this regard just handcuffs (us) next year.”
Other members of council raised alarm about diverting funds away from city reserves, given the $250+ million dollars the city will need should it go forward on the future capital projects.
Coun. David Campbell said council has done “pretty spectacular” work to reduce its own contribution to the tax levy to .38 per cent, and expressed concern about diverting funds away from future needs to reduce the tax hit in 2025.
“We have a responsibility to the taxpayer, as has been said, we absolutely do, but we have a responsibility to the taxpayer beyond this term of council,” said Campbell.
“We're looking at $250 million – I don't think it's wise at all to reduce our contribution to that. I think future councils, including this one over the next two years, will pay for that decision.”
The mayor, nonetheless, argued that surplus investment funds could make up the difference and reduce the burden on taxpayers, citing city investment surpluses in most years since 2015.
“I think at the end of the day, tough decisions are what we do. I mean, these are the things we need to think about,” McIsaac said.
“We've had a history in the last eight, nine years, the surplus is (an) average of at least two-and-a-half million bucks, so this just lines it up and gets it closer to the number," said the mayor.
“I think we've got a responsibility to taxpayers to make sure that we maximize our efforts here, and that's what this is doing.”
The 2025 budget is set for ratification on Dec. 9.