Fort Smith leaders and residents grapple with hole in budget

Fort Smith’s leaders consulted residents at a public meeting last week as the town tries to find ways of closing a revenue gap for the year ahead.

In a three-part Thursday meeting lasting more than three hours, residents were asked to contemplate potential property tax increases, how often garbage is collected, and how seniors are taxed.

Fort Smith’s council has until the end of December to pass a balanced budget for 2023, as is required by territorial law.

The town says it currently faces a $180,000 deficit in its operations and maintenance budget and an $80,000 deficit in its utilities budget.

Town senior administrator Cynthia White told Cabin Radio Fort Smith is looking at a property tax increase of five percent “at the minimum to try to cover the balance if there are no cuts to services.”

According to documents published ahead of the meeting, that would equate to a $204 annual increase for a home worth $300,000 (if the mill rate ratio, which decides how residential, commercial and government property owners share the tax burden, remains unchanged).

The town says it, like other NWT municipalities, is underfunded by the territorial government to the tune of $3.3 million. The territory has since 2014 acknowledged municipalities are not appropriately funded.

“Council identified certain areas where they were concerned about loss of revenue or excess services. If we don’t have that $3.3m by which the GNWT is underfunding our municipal government, both operationally and in regard to infrastructure renewals, where are we going to get that money?” White asked.

‘Touchy situation’ for seniors

One of the most contentious parts of that discussion is the prospect of changing the way seniors are taxed.

At the moment, anyone aged 65 or over in Fort Smith has 50 percent of their tax bill covered by the GNWT and the other 50 percent paid by the town, which also pays that group’s school taxes.

Deputy mayor Jay MacDonald told residents at Thursday’s meeting that this program currently costs the town $212,000 in tax revenue annually – the equivalent, he said, of a 5.72-percent tax hike for all other property owners.

MacDonald said the town council has already decided to stop paying school taxes on behalf of seniors. He said the sustainability of the seniors’ tax relief program was in question, with 23 percent of town properties now enrolled in the program – a four-percent increase since 2016 and a group expected to grow as the territory’s population ages.

Asked directly whether council intended to raise taxes for seniors, he responded: “No, that is not the intent.”

“The program doesn’t clearly define who is eligible. It doesn’t clearly define what the requirements are to participate. It’s very vague. So what we need to do is look at that bylaw and prepare a new draft,” MacDonald continued.

“And part of that process will involve input from the community. We’re not going to do this in a silo.

“We’re not trying to sit up here and have all of the seniors pay taxes. That’s not what we’re trying to do. We’re trying to create a program that’s sustainable over time. And we have to look at that from a perspective of fiscal responsibility to the whole community. There’s a whole tax base, it’s not just who’s eligible for this program. But every time that we add to the program, someone has to cover the difference.”

Many of the residents in attendance said they would be affected by any change to the program.

“Seniors have a concern, and I think it’s a good one, when they see something like this,” said one attendee. “A lot of seniors live on fixed incomes and will have trouble if they have to pay another two or three thousand dollars in taxes.”

Fred Daniels, Fort Smith’s mayor, promised no decisions would be taken without more community input. The town says no changes will be made to seniors’ tax relief for the coming year.

“We have a problem in front of us … and it’s a touchy situation,” Daniels told residents.

“Previous mayors and councils could have dealt with this matter but they didn’t, because they didn’t want to get you guys mad.

“In four more years, you’ve got baby boomers like me who are going to turn 65. For this town to sustain that, we need to come up with a system that’s going to work … we also need to look after the younger youth that are coming up and working here, so that they can afford their mortgages and everything.

“We’ll go back and then we’ll come back and meet with you again, till we get it right. We’re not going to leave the residents alone and do our own thing.”

Ageing infrastructure

A more general across-the-board tax increase is, however, highly likely for 2023 if there isn’t a significant cut in services.

“A lot of the infrastructure within Fort Smith, unfortunately, was all built at the same time,” MacDonald said on Thursday.

“So it’s all starting to come to end-of-life or have failures at the same time. This is a significant challenge for the community to ensure that we have the proper funds and resources in place to be able to deal with this.”

In addition, MacDonald said, small outgoings were adding up.

The town pays the NWT Power Corporation $15,000 to $20,000 annually just for its Christmas lights, MacDonald said, a service he said used to be donated by the power corporation but is now billed. MacDonald said that alone equates to a 0.5-percent tax increase. Fireworks on New Year’s Eve and Canada Day together total almost $40,000 more, he added.

Some residents want the town to dip into its reserves to cover the $180,000 operational deficit.

“To me, it’s nothing,” said one. “When you have taxation revenues at $3.6 million and user fees at $2.9 million,” they said, quoting the town’s statistics, “$180,000 in deficit is nothing.”

But White said using reserve cash to cover the gap would leave the town at risk.

“When you move those funds and then we have a major landslide or another natural disaster, like a wildfire, we no longer have access to those funds to deal with the cost of those cleanups or emergency situations,” White responded on the night. “We need to keep a certain amount of money in our general reserves.”

Garbage changes planned

At the same meeting, the town floated the prospect of dropping garbage collection to once each week.

Fort Smith residents currently have twice-weekly garbage collection with no standardized bin size. The town hopes moving to one weekly collection will encourage residents to cut down on the waste they create.

In the longer term, Fort Smith is planning to introduce composting and recycling for the first time once a public education campaign is complete. That initiative will follow federally funded work to modernize the town’s landfill and the acquisition of a new waste truck with an automated arm and specialized bins.

“We’ve discussed a possible reduction in garbage pickup to once a week as a potential way to save money and to assist in working toward modernizing our waste collection process,” MacDonald told residents.

“As time goes on we want to try to create less waste, to be more efficient, to be better environmental stewards.”

Some residents on Thursday were not convinced.

One raised concern that fewer collections could attract wildlife to garbage left building up. Another worried about garbage being dumped illegally.

“I don’t think it’s just an easy fix. This is a cutback and I think the town should be looking at a lot of other areas to cut back our costs,” they said.

Others were supportive. One resident said: “We’ve never done recycling in I don’t know how many years in Fort Smith. So I think it’d be a great opportunity for us.”

More: Watch the full meeting on the town’s YouTube channel

White told Cabin Radio funding related to waste collection expires in 2027. The town hopes to have a much more modern solution in place – including recycling and organics collection – “well before that.”

“In the interim, we’re committed to doing a great deal of education and innovative thinking on how to support a greener community,” White said.

Council will next meet in committee on December 6 to discuss budgets for the year ahead. That meeting will begin two hours earlier than usual, at 5pm, to provide extra time for deliberation. Residents are encouraged to attend.