Greater Sudbury’s overall tax levy is slated to go up by 4.7 per cent in both 2024 and 2025, according to the direction city council gave staff on Tuesday evening.
But, “nothing’s written in stone,” Ward 9 Coun. Deb McIntosh told Sudbury.com following Tuesday’s finance and administration committee meeting, which she chaired.
At play are many variables, not the least of which the fact that no service level changes have been factored into the 2024 and 2025 budgets.
City council budget deliberations won’t take place until December, when at least two full days will be set aside for the city’s elected officials to hash out the budgets.
Tuesday’s decisions of city council helped set the stage for these upcoming talks, and equipped city administrators with the direction they need to table a proposed draft budget by Nov. 15.
“We have some work to do yet to align with the 4.7 per cent increase,” city Corporate Services general manager Kevin Fowke told city council members during Tuesday’s meeting.
With next year’s status quo version of a municipal budget projected to require a 7.5 per cent tax levy increase (when factoring in a projected assessment growth of one per cent), city staff will need to cut approximately $9.1 million from the base budget to meet city council’s 4.7 per cent tax levy increase target.
A similar exercise took place in drafting the 2023 budget last year, which initially required a 9.3 per cent tax levy increase. City staff cut $17.8 million from the base budget to achieve council’s direction of a 3.7 per cent increase. Subsequent 2023 budget decisions of city council coupled with a 5.66 per cent police budget hike to create a final overall tax levy increase of 4.6 per cent.
The city’s next round of budget deliberations in December will be the first time they tackle multi-year budgets. City council members will decide on a two-year operating budget and a four-year capital budget.
Among the decisions they’re slated to make is whether to proceed with an additional 1.5 per cent annual tax levy increase for each year of the four-year capital budget, which would yield a total of $55 million earmarked toward additional roads investment.
McIntosh proposed the special capital levy for accelerated road and renewal funding during Tuesday’s meeting, noting the condition of Greater Sudbury’s roads is a common point of contention among residents.
Indeed, Greater Sudbury roads are deteriorating, and are on track to drop from an overall “fair” to “poor” condition by approximately 2030 at their current rate of funding. By the city’s estimate, approximately $80 million per year needs to be spent on roads per year, and the five-year average annual investment has been less than half that, at $35 million.
During budget deliberations, city council members will also consider tacking an additional 0.5 per cent onto next year’s tax levy increase to boost the city’s reserve funds, which city CAO Ed Archer described as low. As such, the city is left with little financial wiggle room in the event opportunities such as matching funding grants with senior levels of government arise.
According to the latest BMA Management Consulting Inc. study, which benchmarks 113 Ontario municipalities against one another, Greater Sudbury’s reserves amounted to 30 per cent of its own-source revenue in 2020, which is less than half of the municipal average of 70 per cent.
Per a motion by Ward 5 Coun. Mike Parent, city administration will also compile business cases for city council consideration to pare down the projected 2024-25 tax levy by 0.8 per cent.
During Tuesday’s meeting, Parent noted the city’s 2023 tax levy increase of 4.6 per cent and the 4.7 per cent projected for both 2024 and 2025 (and through to 2033, according to the city’s latest long-range financial plan) is greater than their average for the past several years.
Greater Sudbury’s 20-year average tax levy increase to 2022 was 3.9 per cent, and the 10-year average to that time was 3.1 per cent.
Archer explained that recent inflationary pressures, labour shortages and increased demand for asset renewals as it relates to things such as environmental sustainability have all factored into the increased dependency on property tax revenue. Previous city councils also drew from reserves in order to keep taxes low.
Although Parent responded by asserting that past councils have kept taxes “artificially low” by doing so, Archer clarified it’s a matter of city council’s discretion.
With the topic of Greater Sudbury taxation dominating Tuesday’s meeting, Ward 7 Coun. Natalie Labbée raised the perception that local property taxes are higher than average.
This is a perception the city has tackled a number of times in recent years. City staff’s go-to response has been citing the latest BMA report, which Archer repeated on Tuesday.
The report benchmarks 113 Ontario municipalities against one another using various property types, but the example property the city uses is a detached bungalow with 1,200 square feet, three bedrooms, one and a half bathrooms and a garage on a 5,500-square-foot property.
The owner of this detached bungalow example in Greater Sudbury would have paid $3,453 in 2021, which is in the mid-range among Ontario municipalities listed in the report, whose average was $3,613.
Among municipalities with a population of greater than 100,000, the taxes charged on this example property in Greater Sudbury is the third lowest among the 30 listed (their average is $4,269). Municipalities in this range are considered to carry comparable service levels, so offer a better “apples to apples” comparison.
Tyler Clarke covers city hall and political affairs for Sudbury.com.