A closer look at Yellowknife's proposed 2023 budget

In three weeks, Yellowknife's new city council will approve a budget for next year. Right now, they face a budget proposed by city administration that comes with a 7.47 per cent property tax increase.

Administration made its pitch to city council earlier this month. They said infrastructure and program costs, and inflation, are rising, but the city's assessment base has stayed basically the same size. The tax hike is necessary, they said, to achieve all the plans laid out in the draft budget.

Several residents decried the proposed tax increase. They told CBCNews it would add further stress to a population already struggling with the high cost of living.

But taxes are just one part of the equation.This article compares parts of the proposed budget with previous years', and takes a look at what's at stake in 2023.

Impact of new pool

The city proposed a budget that anticipates $112 million in revenues and $152.8 million in spending. It reflects significant increases, on both sides of the ledger, compared to five years prior.

In 2018, the city brought in $82.3 million in revenues and spent $84.4 million. This means that by the 2023 budget year, revenues and expenditures are expected to rise 36 per cent and 80 per cent, respectively.

In an emailed statement, a city spokesperson said increases in revenues and expenditures since 2018 reflect "increased infrastructure services, programs, and citizen expectations, as well as general inflationary pressure."

On the expenditures side, 2023 is something of an outlier, with a sizeable jump in capital spending due to the new aquatic centre.

The money set aside for capital projectsis $68 million, with $43 million going toward the new pool. The city has budgeted about $71.8 million in total for that project, and expects running the pool will cost another $1.8 million per year. Construction is scheduled to finish in 2024.

This major build comes after a referendum in which Yellowknifers voted in favour of the city borrowing $10 million to finance it.

The new pool will "absolutely" affect people's property taxes in 2023, said former city councillor Julian Morse, who was in officeduring the referendum.

"It was also voted on directly by taxpayers, so that choice was made, and I think the implications were quite clear that it will impact property taxes over the next number of years that that debt is being paid down," he said.

According to the draft budget, the city expects to bring in $36.8 million in taxes in 2023. That's $2.7 million more than it's forecasted to take in through taxes this year, and $8.9 million more than it collected in 2018.

To be sure, municipal taxes are just one source of income for the city and they're not even the main one.

According to the 2023 draft budget estimates, tax revenue would account for just 33 per cent of the city's total projected revenues. Government grants (40 per cent), user charges (24 per cent), land sales (twoper cent) and investment income (oneper cent) make up the rest.

User charges are another direct expense that's unavoidable for most residents. These include fees for water, garbage and the use of city facilities like the Fieldhouse and Multiplex.

In 2023, the city wants to raise fees on water bills and landfill tipping 11 per cent, and user fees for city facilities and programs threeper cent.

If council approves these fee hikes, the city estimates it would bring in $26.9 million from user charges in 2023, about $829,000 more than it expects to take in from user charges this year.

Yellowknife's tax hike routine

City council has increased property taxes, in an ad hoc way, every year for the last five years.

Generally, taxes have risen between 1.44 and 2.5 per cent until last May, that is, when council adjusted the mill rate ratio and approved a 9.04 per cent tax hike for residential properties.

Four times out of five, these increases came after city administration recommended something much higher (in 2019, council agreed to the city's proposed 1.44 per cent increase).

It's a familiar dance: administration presents council with a budget containing a high property tax increase, and over a few days of budget deliberation, council whittles it down to something more palatable.

For 2022, for example, administration recommended a13.44 per cent increaseand council brought it down to 5.56 per cent. For 2021, administration pitched an11.92 per cent hike, and council trimmed it to 2.5 per cent.

It doesn't have to be this way, though, said Morse. Council could direct administration to draft a budget that fits within parameters set by the councillors.

"Say inflation is two per cent this year, and council says we want to have a budget that's within three points of inflation, give or take. Administration could bring that forward," he said.

In Morse's view, property taxes should rise with inflation.

"There's been years where tax raises have been below inflation, and the tough thing with that is that if you're taxing below inflation, that will catch up with you," he said.

"You're going to be in a situation where city revenue isn't where it needs to be in order to deliver service, and you're either cutting services or you're raising taxes."

The city spokesperson said that if council cuts $343,700 from the 2023 budget, it could shave one per cent off the proposed property tax hike, bringing it down to 6.47 per cent.

'Instead of raising taxes... develop more land'

Yousry Abdelmegid, the owner of Yellowknife's Main Street Pizza, says any property tax increase simply adds to the already high cost of living and doing business in the city. He expects property owners will pass the new cost onto their tenants.

For Abdelmegid, who has lived in Yellowknife for 26 years, the city has become unaffordable. He's now looking to sell his business and move away.

"The housing costs, the cost of living and everything, this is what drives people away and also discourages people [from coming] to the city," he said.

Abdelmegid said if the assessment base is stagnant, as the city says it is, then it's incumbent upon the city to find more land to develop, and to encourage new building projects.

"There is a crisis here in the housing market," he said. "Instead of raising the taxes, develop more land, get the people to develop more, build some more stuff."

CBC News reached out to the Yellowknife Chamber of Commerce, but its executive director said they couldn't respond before deadline.

Wage increases at the city

The proposed budget also includes $34.4 million for wages and benefits, a 10per cent jump from 2022's forecast, and a 30 per cent increase from 2018.

The city spokesperson confirmed that management and "excluded staff" recently received a "general economic increase," but they wouldn't give any more details. They said firefighters and municipal enforcement officers also got pay raises.

The Union of Northern Workers and the city of Yellowknife are currently negotiating a new collective agreement for city employees.

Union President Gayla Thunstrom wouldn't comment on those negotiations, but said "all city employees deserve to keep up with the skyrocketing cost of living, otherwise they are just losing money."

It's unclear whether a potential wage increase for city staff is accounted for in the 2023 draft budget.