YK councillors approve 2.5-percent tax increase for 2021

Yellowknife’s councillors approved the city’s 2021 budget on Monday night, which will see residents paying 2.5 percent more in property taxes next year. 

Councillors were initially presented with a potential 11.92-percent tax hike but they reduced expenditures during four nights of budget deliberations last week.

The moderate tax increase represents an attempt at a balancing act between overtaxing residents during a pandemic and ensuring there is still enough money in the city’s capital fund to get things built.

Councillors ultimately passed a motion to transfer a little over $1 million to the capital fund. Julian Morse, Shauna Morgan, Rommel Silverio and Robin Williams opposed the move. 

Councillor Steve Payne, who introduced the motion to do so, said it was a “responsible” choice that would prevent bigger tax increases in future if the fund gets depleted.

An alternative would be to transfer less money to the capital fund and keep taxes lower. Payne said that wouldn’t sit well with him, “knowing people are going to get a shit scare next year when we increase our taxes up to a point to compensate for the low tax this year.”

“We’ll still get crapped on for having an increase,” Payne said of the chosen option, but he added residents would understand this increase more than, say, a five-percent tax increase next year if this year’s increase was too small.

Silverio, by contrast, wanted a smaller tax increase and less tax money placed into the capital fund. 

“This is the year we need to give back to Yellowknife,” he said. 

City administrator Sheila Bassi-Kellett noted that there are several costly capital projects on the horizon in the city’s “ambitious” 10-year capital plan – including some that need to be completed to meet regulatory requirements. Not all are optional projects like a new aquatic centre.

Bassi-Kellett advised councillors that the city needs to save for those projects while keeping tax rates manageable and consistent. 

“Borrowing costs a lot of money and we don’t want to solely rely on borrowing,” she said. 

Mayor Rebecca Alty added that beyond capital projects, the city will have to use more tax revenue to pay for operating expenses in 2021. That’s based on a projected loss of other revenues as a result of the Covid-19 pandemic.

For example, Alty said, in 2021 the city will need to use $2.2 million in taxes to keep its arenas open – compared to just $1.5 million in 2019 – because of a loss in user fees.

If the city instead relies on user fees, she argued, prices would be so high that nobody could afford to use the city’s recreational facilities. 

“We can all hope that the [Covid-19] vaccine’s coming in the next 24 hours and we’ll be able to recover those revenues, but it’s a substantial hit that we’re going to take,” Alty said.

“Nobody’s going to stay in Yellowknife if we only have good roads and good sewage. We also need those recreation facilities and, in the midst of a pandemic, I think it’s important to offer those recreation opportunities.” 

Ultimately, Silverio and Williams were the only councillors who did not vote in support of the budget on Monday. 

The city’s budget – which must, by law, be balanced – depends on funding worth $855,000 promised by the territorial government as part of its plan to address the GNWT’s recognized chronic underfunding of municipalities.

The city is also expecting $130,000 in territorial dollars to fund its street outreach program. While the NWT government has verbally expressed support, those funds aren’t yet set in stone. 

“We’re pretty confident. We know that the GNWT’s a great partner to us … but lots of things can change,” Bassi-Kellett told councillors of the city’s expectations.

The NWT’s Department of Municipal and Community Affairs told NNSL the money – both the $855,000 and $130,000 sums – would be forthcoming.