Thunder Bay administration proposes 'difficult' city budget as rising costs cause strain

Inflation, the war in Ukraine, and the COVID-19 pandemic are contributing to what City Manager Norm Gale is calling "the most-difficult budget ever faced by a city council" in the history of Thunder Bay.

City administration released its proposed 2023 municipal budget on Wednesday, the first step in a roughly month-long process that will include community consultation, debate and a vote from city councilllors before it's finally passed.

The proposed budget includes a before-growth increase of about $12.8 million, or 6.18 per cent. After projected tax assessment growth is factored in, however, the proposed increase drops to$11.6 million, or about 5.6 per cent.

Simply put, the tax levy is the amount the city needs from taxpayers to fund city services and capital infrastructure programs.

Gale said putting the proposed budget together was difficult for city staff.

"There are extraordinary external factors that have confounded us in progressingthis budget, not limited to emerging, arguably, from a pandemic that's lasted three years now, the war in Ukraine and worldwide inflation that we have not seen in generations," Gale said during a presentation at city hall on Wednesday morning. "These are all impactful to the corporation of the City of Thunder Bay like they are to everyone who lives in the city."

The city said the keyincreases in the proposed budget include the following (numbers in brackets are proposed increases compared to 2022):

• Thunder Bay Police Service ($4.1 million) and the police services board ($300,000);
• Inflation driving up costs of materials and purchased services, including road salt and road paint, food for long-term care facilities, and repairs and parts for facilities and fleet services ($1.6 million);
• Outside boards, including those of the Thunder Bay Public Library andDistrict of Thunder Bay Social Services Administration Board ($900,000);
• Various program and service expansions, including the city's human resources and digital strategies ($1.3 million);
• Insurance ($600,000), fuel ($500,000), and debt ($300,000).

"I don't think anyone is comfortable with the budget increase that we have right now," Galesaid. "But we all must recognize the reasons for it. Those reasons are real, so I think it's going to be a difficult process."

However, the city also said it has found ways to offset those rising costs. Thatincludes$800,000 in corporate vacancy savings, a $700,000increase in other revenue (including administrative recoveries and casino revenue)and increased user fees for facilitieslike campgrounds and ice rentals, which will bring in another $300,000.

When it comes to the proposed tax increase, Gale said it's still too early to say whether this will be what residents actually pay in city taxes next year.

"This is the size of the budget increase that we are proposing to council," he said. "That does not equate to what a property owner will pay."

"Decisions need to be made over the next six months before that final determination is made as to what a property owner will pay for an increase, and that will vary based on the classes of property, and based on decisions that council makes."

Major infrastructure projects still planned

Linda Evans, the city's treasurer and general manager of corporate services and long-term care, said it's not yet known what effect proposed budget, were it to be approved by council as presented, would have on property taxes in the city.

"I can't advise that at this point," she said. "We need council to make decisions on the tax policy, and ... what portion of the tax levy various property classes will be responsible for."

Evans said the city will be able to provide an estimate when the budget is ratified.

Gale said some major planned infrastructure projects are still included in the proposed budget, including the reconstruction of Red River Road and the downtown north core, new pedestrian crossovers in various locations, improvements to the Canada Games Complex and Fort William Gardens, and the first phase of demolition of Victoriaville.

The budget also includes the addition of 50.9 full-time equivalent positions with the city, an increase of 2.4 per cent over last year. About 40 per cent of those will be fully- or partially-funded by other levels of government.

The proposed budget also includes a reduction in capital spending

Budget keeps social services intact

Evans, the city treasurer, said the decision to propse the tax levy was not easy, but it does keep social services provided from the city intact.

"This was very difficult. We attempted, at all costs, to not have any significant service reductions," Evans said.

"We talk about the impact of inflation to to everybody," she said. "We managed to keep things like ... Meals on Wheels, for example, no increase to the cost.Programs that that benefitpeople that arestruggling."

"We really focused on those types of programs to maintain them."

The city's overall proposed 2023 tax-supported budget is just over $413 million gross, about$13 million more than 2022.

Meetings this month

Budget meetings will be held over the course of January a full schedule is available on the city's website and a ratification vote is scheduled for Feb. 6.

Public feedback on the budget can be provided in various ways, as well, including through deputations, which can be made either in-person or virtually, at the Jan. 12 or Feb. 2 meetings. More information about the process is available on the city's website.

A survey is also availableon the city's Get Involved page, and hard copy surveys are available at city hall, and the Waverley and Brodie library branches.