City of Yellowknife proposes 8.48-percent tax increase

City of Yellowknife administrators are proposing an 8.48-percent property tax rate increase as part of the municipality’s 2020 budget, which will now be scrutinized by city councillors.

Senior administrator Sheila Bassi-Kellett acknowledged residents may experience “sticker shock” at the increase, which would be the biggest in at least 15 years.

The recommended increase is provisional and can be adjusted by councillors before being finalized in December.

“Council is going to go through a process now to see, OK, what does the appetite look like for this? And what can we actually stomach as a community?” said Bassi-Kellett following a budget presentation on Monday.

City officials see the budget, and proposed tax increase, as a balancing act between a good quality of life for residents, “palatable” taxes, and council’s stated objectives.

In full: Read the City of Yellowknife’s draft 2020 budget

In effect, the draft budget offers a reality check – outlining the tax rate staff think is necessary to pay for what councillors have said they want to see. It is then up to councillors to scale back spending until they feel the required increase is appropriate.

Last year’s tax increase was 1.44 percent. The year before, councillors approved a tax increase of 1.86 percent – after administrators had initially proposed a 5.64-percent increase.

The City says the budget factors in the needs of core services (water and sewer, roads and sidewalks, safety, fire protection, and clean drinking water) alongside other projects that require municipal attention and cash, like dealing with cannabis legalization and paying the carbon tax. Lastly, and critically, the proposed budget factors in the goals and objectives laid out by council in its first year since 2018’s election.

Upcoming challenges include the need to repair Yellowknife’s old infrastructure and work to ensure programs are adequately funded. For example, the library has seen its user base double in recent years.

The Giant Mine remediation project, officials said, is another example of a drain on the municipality’s funds. While federally led and funded, the remediation requires “significant City resources,” director of corporate services Sharolynn Woodward said.

Mayor Rebecca Alty said inadequate territorial funding for communities, long an issue raised by municipalities, remains another factor. The City maintains it is underfunded to the tune of $11.4 million annually.

Explore: Use the City’s property tax calculator on your home

For a property assessed at $450,000, the 8.48-percent increase would translate into a tax bill of $2,588, up from $2,385 for 2019 – an increase of $203.

In addition to the proposed tax increase, an increase to service charges is set out in the initial draft budget.

Fees at the dump, and for a range of facilities and programs, would increase by three percent next year, while water and sewer services would see a 3.5-percent increase. Woodward said the changes are “fairly consistent” with previous years.

What’s behind the proposed increase?

One area affecting the budget is social issues, such as the City’s contribution to the sobering centre and street outreach van.

Woodward, hinting at friction between the day-to-day financial reality faced by staff and councillors’ vision of the City’s role, said much of the City’s social spending is “for things that aren’t even within the government’s mandate, but council has decided we will direct our taxpayers’ revenue right at them – that’s almost two percent of taxes.”

In total, taxes – paid by those who own homes and commercial real estate – provide 40 percent of the City’s revenues.

Property taxes are determined by what is called a “mill rate.” This rate is calculated by dividing the revenue the City needs from property taxes by the total assessed value of all taxable properties within Yellowknife. The mill rate is then applied to the assessed value of each property.

The mill rate is increasing this year, Woodward said, as the City expects to see only “modest growth” in the number of properties paying taxes. This means each property owner must pay more tax.

Adding to this is inflation, which Woodward said has increased at rates exceeding the City’s tax rate.

According to Woodward, back in 2000, the City decreased its tax rate by two percent. This was followed by four years without an increase, while Yellowknife’s taxpayers also saw no tax increases in 2013, 2015, and 2016.

City administrators feel that approach is no longer sustainable.

Woodward quoted the credit rating agency Moody’s which, in a recent report about the City of Yellowknife, stated: “Operations are pressured due to multiple years of low or no tax increases. Yellowknife’s focus on maintaining low or no increases in property taxes widens a mismatch between revenues and expenditures in the medium term.”

What to cut, if anything?

According to the Cities, Towns and Villages Act, Woodward said, cities must have balanced budgets. This will mean either the City goes ahead with the proposed tax increase or councillors begin looking at where to cut.

Bassi-Kellett said the City would give councillors some initial options, which may involve decreasing service levels or looking at things Yellowknife offers that other cities don’t. 

“We still want to keep the population growing. We don’t want to do anything that detracts from attracting people to move to Yellowknife,” she said. “But maybe we can adjust hours of certain facilities, maybe … we’re going to see if it’s possible to do things in a different way.” 

Several large capital projects are on the books for 2020. These include $9.6 million toward a new aquatic centre build, which could begin in 2020 if it is approved in the budget; a $3.6-million paving program; and replacing water and sewer infrastructure to the tune of $3.6 million. 

In total, capital projects are set to cost the City $24.2 million. Several of these capital projects won’t have a direct impact on taxes in 2020, Woodward said, as their funding is provided through transfers from higher levels of government. 

The budget allocates $29.8 million for wages and benefits. The city is proposing 5.5 new positions, including a new manager of economic development. Even with these additions, the City’s spending on salaries will remain within 35 percent of its total expenditures – which, Woodward said, was below the figure for many other jurisdictions. 

The City’s $24.5 million for operations and maintenance includes replacing firefighter and municipal enforcement equipment, funding for special events contractors, and library items. 

Overall, the city’s revenues are a projected to reach $85.7 million and expenditures $85.1 million. 

What’s next? 

Councillors will have until November 25 to give feedback on the budget. On November 18, residents can make presentations to council. Then the document makes its way through the approval process and is expected to be adopted by council on December 9. 

The City, meanwhile, is lobbying the federal and territorial governments for fairer government transfers, a backgrounder on the budget stated. 

Ollie Williams contributed reporting.