Mixed signals

Council balks at creating a new tax levy before it sees the 2023 budget

It was a wee taste of a what-is-likely-to-be turbulent budget debate. A week earlier, Council had signalled support for a new Roads Plan—that called for massive (three and half times) annual spending increases on the roads—roads downloaded upon the municipality from the province over two decades ago.

Municipal leadership wanted to test that signal. Was Council serious? Was it ready to ratchet up tax rates to fund its infrastructure deficit? To put other priorities aside to focus on roads? Better to know now than before the budget documents are printed and distributed.

To test Council’s newfound resolve, a few items were added to last week’s special council committee meeting.

The first sought to increase the municipality’s debt ceiling. It passed with a few questions. Another item aimed at dedicating 70 per cent of Shire Hall’s share of Municipal Accommodation Taxes toward roads also got the nod from Council.

But it was a request for the creation of a brand-new levy dedicated to capital works—one per cent of the total tax levy— that got the most attention in the meeting. Chief Administrative Officer Marcia Wallace framed the question before Council.

“This was brought forward in light of the meeting [in which the roads plan was presented],” explained Wallace. “We’re looking for creative ways to ensure a more robust stream [of revenue] heading into our reserves. We are trying something different here—trying to get some direction. So we have a better sense of where you are headed.”

The direction forthcoming was decidedly mixed.

Some councillors, led by Janice Maynard and Phil St-Jean. were eager to approve the new capital levy. And more. Maynard suggested doubling the levy this year—from one per cent to two per cent this year and an additional one per cent each year for this council’s remaining term.

Maynard argued that since the $25.4 million annual spending increase—specified by the new Roads Plan—didn’t kick in until 2024 due to the plan’s phasing, the capital levy was a good way to jump-start funding for roads and infrastructure.

“We are giving staff direction about the things we want baked in [to the budget],” Maynard told her colleagues. “To me, [roads] should be our main priority. That means some of the other things in the budget may have to go.”

Picton council member Phil St-Jean was just as enthusiastic about extracting fresh new dollars from taxpayers to put in a capital reserve pot for roads.

“Let’s be honest,” said St. Jean. “Roads are our biggest responsibility. We need to ensure they are appropriately funded.”

Others weren’t quite as keen. Brad Nieman said he couldn’t approve any increase to the budget of more than two per cent. Adding a new levy to the 2023 budget that he and his colleagues had not yet seen was, in his view, a nonstarter.

North Marysburgh councillor David Harrison and Ameliasburgh representative Sam Grosso were in the same boat—they wouldn’t approve a new levy until they saw the budget.

Wellington councillor Corey Engelsdorfer asked if this new levy would grow on a compound basis. Director of Finance Amanda Carter confirmed that it would.

What does this mean? A one per cent capital levy based on last year’s total levy would add $438,000 to the total levy. It would continue to expand each and every year. At a minimum, it will reach $452,000 by the end of this term. Of course, as the general tax levy rises, the capital levy will grow. It is not difficult to envision the capital levy reaping the better part of $1 million or more each year in the foreseeable future.

Engelsdorfer noted that this decision would have implications for future years.

“We’re building a reserve,” said Carter.

In the end, there weren’t enough votes to support a capital levy—not, at least, before Council had seen a budget. Both the two per cent and one per cent levies died on a tie vote.

So, in the end, the signal to staff was mixed.

St-Jean could barely contain his dismay at his fellow councillors.

“We are not allowing our staff to include in a calculation any amount?” asked St-Jean. “That no capital levy will be in the budget at all?”

Of course, he or another council member will resurrect the capital levy during the budget talks. And Council will have this debate all over again.