The City of Greater Sudbury’s proposed 2024-25 budget is being tabled on Nov. 15, but what will it mean?
In short, it’s city administration’s proposed municipal budget, which follows city council’s direction to limit annual increases to 4.7 per cent.
The finance committee of city council will debate this base budget in December, and is slated to settle on a final version by the end of the year.
With various costs increasing in recent months (the non-residential building construction price index reached 9.9 per cent as of the fourth quarter of 2022), limiting the tax increases to 4.7 per cent will require staff to cut $10.5 million from the base budget.
During 2023 budget deliberations, city staff were charged with trimming $17.8 million from that year’s base budget to hit that year’s desired maximum tax increase, which they did in a manner outlined in a report presented to city council.
A similar such report will be presented to city council members on Nov. 15 highlighting where the $10.5 million is being drawn from. Ward 5 Coun. Mike Parent issued a motion last month requiring city staff to cut the $10.5 million in a manner that won’t impact service levels or introduce new user fees.
City CAO Ed Archer clarified to Sudbury.com that it’ll be up to city council whether the methods staff propose to cut $10.5 million from the base budget are agreeable.
There’s a great deal of additional context behind upcoming budget talks, not the least of which being this is Greater Sudbury’s first multi-year budget, following a successful motion by Ward 9 Coun. Deb McIntosh to implement two-year operational budgets and four-year capital budgets.
The following are some key things to look out for, and important context behind the city’s upcoming budget deliberations.
Challenges associated with keeping the tax increase low
It’s not just city staff’s need to cut $10.5 million from the base budget getting in the way of limiting the 2024 and 2025 budgets to 4.7-per-cent increases, tops.
The Greater Sudbury Police Service board added a hurdle earlier this month, when they unanimously greenlit hiring 26 additional staff members over the next two years, which bumps their annual budgets by a respective 8.09 per cent and 6.92 per cent.
This is greater than the 4.7-per-cent maximum city council mandated, which works against their goal of limiting this year’s tax increase. A disproportionate strain on city taxes is nothing new for GSPS. Although they make up approximately 11 per cent of the city’s gross budget, their budget increases have contributed to 21.9 per cent of the city’s tax levy jump between 2019-23.
On top of maintaining status-quo service levels, the city’s elected officials will also consider 42 business cases advocating for various changes, most of which requiring cost increases.
Among the more notable business cases is a push to hire eight additional full-time firefighters, and one which would add 11,000 conventional GOVA Transit hours in 2024.
Not all 42 business cases had cost estimates attached to them at the latest update last month, at which time those with prices attached carried a total budget impact of at least $4.8 million.
Also working against keeping the tax increase low is the city’s infrastructure deficit. The city is estimated to be underfunding its assets by approximately $130 million per year. If placed entirely on the 2024 tax roll, this gap would require an additional tax levy increase of approximately 39 per cent. On their current underfunded trajectory, city assets are on the path toward further degradation. City roads, for example, are currently in an overall “fair” condition,” but are on track to slip to an overall “poor” condition by 2030.
City staff plan to recommend increasing the municipal tax levy by an additional 1.5 per cent per year toward addressing infrastructure needs. The city’s elected officials voted against a similar such motion during 2023 budget deliberations.
City council is also slated to vote on an additional 0.5-per-cent tax levy increase in the 2024 budget to reduce the risk of cost fluctuations from implementing a multi-year budget.
For those keeping count, if all these recommendations were fully implemented (minus business cases and not including a 39-per-cent increase to entirely fill the infrastructure gap in a single year, which has not been recommended by city staff), the tax increase would hit 6.7 per cent.
Each one-per-cent change in the tax levy represents approximately $3.3 million in expenditure, which makes this the number to look at when considering the tax impact of business cases.
Meanwhile, the city’s water/wastewater rates are slated to continue going up by 4.8 per cent annually.
How do Greater Sudbury’s tax levels compare?
Every round of budget deliberations comes with accusations that Greater Sudbury’s tax rates are “too high.”
Although it’s a subjective assessment, there’s a strong case for this argument when it comes to industrial properties, whose tax ratios currently exceed provincially mandated maximums.
As for the owner of the average family house? Not so much.
Greater Sudbury’s taxes are on the low end for the average resident compared to other Ontario municipalities with populations greater than 100,000 (using 2022 property taxes).
Using a single-family detached bungalow example property, Greater Sudbury’s property taxes are the third-lowest among Ontario municipalities with populations greater than 100,000, at $3,550 against an average of $4,382.
Compared against all Ontario municipalities, property taxes levied against this example property in Greater Sudbury are still below the provincial average of $3,698.
The city uses a specific “detached bungalow” residential example to compare taxes paid with other municipalities so there’s a direct parallel between each municipality. The example property is promoted as an average home, thereby representing the average experience for the greatest number of taxpayers.
Using some other property examples, Greater Sudbury’s taxes are ranked as “high,” including two-storey homes ($5,627 against a provincial average of $4,885). Walk-up apartments’ per-unit taxes are also considered high, at $1,944 against a provincial average of $1,472.
Commercial properties are also on the high end of taxation in some examples, with office buildings taxed at $3.70 per square foot in Greater Sudbury compared to a provincial average of $3.11. Properties classified as “Neighbourhood Shopping” are taxed at $4.96 per square foot in Greater Sudbury, which is considered “high” compared to a provincial average of $3.78.
Greater Sudbury’s standard industrial (less than 125,000 square feet) property taxation is the highest in the province, at $3.69 per square foot against a provincial average of $1.59. The next-closest municipality in Ontario when it comes to Greater Sudbury’s industrial property tax rate is the Town of Erin, whose rate is $3.07 per square foot.
When it comes to large industrial (greater than 125,000 square feet), Greater Sudbury’s taxes are $1.19 per square foot compared to a provincial average of $1.11.
The city’s industrial tax rates are currently beyond the provincial threshold of 2.63 (meaning they’d pay 2.63 times more than residential property owners, which is the evergreen comparator). The city has been paring down its industrial tax ratios annually to ease them down to the provincially mandated limit, with this year’s ratios currently 3.54 for industrial and 4.12 for large industrial.
Last year’s industrial tax rate ratio decrease shifted $650,000 in budgeted tax revenue from industrial properties onto other property classes.
What’s next?
City of Greater Sudbury staff will table their proposed budget during the Nov. 15 Finance and Administration Committee meeting of city council, whose public portion begins at 6 p.m.
The meeting can be viewed in-person at Tom Davies Square or livestreamed by clicking here.
The Greater Sudbury Public Library, Conservation Sudbury and Greater Sudbury Police Service budgets will also be presented during the meeting.
The city’s elected officials will have a few weeks to consider the city’s proposed budget before debating them in council chambers during two meetings scheduled to take place Dec. 18-19.
At the close of these meetings, the city’s elected officials are anticipated to have approved a 2024-25 operating budget and 2024-27 capital budget.
An associated property tax policy, which determines how the required funds are gathered from property owners, will be approved in May 2024.
A less-involved budget update process will take place at around this time next year for the city’s 2025 budget, which will have been in large part pre-determined during this year’s multi-year budget process.
Tyler Clarke covers city hall and political affairs for Sudbury.com.
