After 2023, Yellowknife studies how to save (and spend) for crises

How much money should the City of Yellowknife store away for the next major crisis? And when the time comes, who has the final say on spending it?

Those are questions being considered by city councillors as the municipality tries to learn some of the lessons that various reports have highlighted after the 2023 wildfires, which forced a three-week evacuation of the NWT capital.

At a meeting on Wednesday, council studied a draft policy that sets out how a recently created Emerging Issues Reserve should be funded.

The reserve is intended to act as an emergency savings account. If Yellowknife is plunged into a future crisis, it would give City Hall some meaningful spare cash with which to act without having to wait on territorial or federal disaster assistance.

The next emergency might not be a wildfire. The city is also thinking of cyber attacks, public health emergencies and infrastructure failures – anything that might need “immediate financial resources to ensure rapid and coordinated response efforts.”

The Emerging Issues Reserve Policy being considered by council would formalize how the reserve is funded – because the city will have to squirrel away money over time to set it up – and also who gets the final say on spending it.

A cap of $10 million appears relatively uncontroversial among council. The idea is to get the fund to $10 million and then keep it there until a crisis requires it. (The city says it spent an initial $13.34 million responding to 2023’s wildfires before assistance from other levels of government kicked in.)

The question is how quickly to get to $10 million.

A briefing note for councillors suggested an annual contribution to the reserve equal to one percent of operating expenditures, but Mayor Ben Hendriksen questioned where the one-percent figure came from.

“I know the idea is to slowly fill this up – I know probably ideally faster than slower – but at the same time, our job is to balance the ideal with property tax hikes and all of those pieces,” he said, noting that diverting about $750,000 a year to the Emerging Issues Reserve would have an impact on the taxes people pay.

City staff said one percent had been chosen as a “good starting point” but they were prepared to look at smaller annual sums, like 0.5 percent. Councillor Tom McLennan voiced support for 0.5 percent, calling that a “baseline” to which council could add more if the financial situation looked good in a given year.

Staff are expected to go away, do some more work on that and come back with more detail in the near future.

Elected oversight

Once the reserve has a sizeable amount of money behind it, there are questions around who needs to authorize spending.

In a crisis, the more people you need to sign off on a major expense, the harder and more time-consuming it becomes to line up the paperwork – a delay you don’t want.

“Time is of the essence,” city manager Stephen Van Dine said.

The draft Emerging Issues Reserve Policy offers up two key rules for spending in a hurry:

• for sums up to $300,000, the city manager can give the go-ahead; and
• for larger sums, either council approves or if that’s “impractical due to the urgency of the situation,” staff can go ahead and get retroactive council approval “at the earliest opportunity.”

The creation of a mechanism whereby staff can spend potentially millions of dollars without any oversight from elected officials seemed to worry some councillors on Wednesday.

“It makes me uneasy to think about removing all elected oversight in an incident like this,” said Hendriksen.

He suggested a compromise whereby permission could be sought from just the mayor, who would then be accountable to the rest of council. That way, staff just need the green light from one person rather than having to convene a full council meeting with the clock running on a crisis.

Again, McLennan backed up Hendriksen, saying “keeping that political oversight is important.”

Van Dine suggested changing the wording to talk about “consultation with the mayor.”

“That would just give us a little bit more liberty, I guess, to move swiftly,” he said.

Hendriksen said he would be happy for staff to do some more “wordsmithing” on that section of the policy before it comes back for final approval.

Elsewhere in the meeting, city staff said they didn’t expect the creation of a large reserve fund to cause problems accessing territorial or federal disaster funding.

They also suggested future councils could adjust the $10-million cap upward as they saw fit, to keep pace with inflation.

A revised version of the policy is expected to come back before council at a later date.

School tax increase confirmed

Also on Wednesday, council held a special council meeting at which the municipal tax levy and school tax bylaw for the year were finalized.

School boards in Yellowknife had requested that the city increase school taxes by 14 percent this fiscal year, saying “the funding model in the territory does not keep pace with the actual cost of educating students.”

The city collects taxes on behalf of schools and determines tax levies – in other words, how the tax burden is distributed among different types of property owners. The city does not, however, determine the total amount of school taxes it collects, as that is up to the school boards.

That meant council was never expected to reject the request, and it received formal approval at Wednesday’s special meeting.

Even so, concerns were raised.

Councillor Rob Warburton said the increases the school boards had requested were “frankly unsustainable” and called on the GNWT to do more.

“The territorial government is responsible for funding education, and right now it’s being pushed onto the taxpayers of Yellowknife and other municipalities in the territory, too,” he said.

The GNWT is locked in battle with the federal government over funding responsibility for large areas of education in the territory after Ottawa cut back NWT schools’ ability to lean on Jordan’s Principle funds.