Halifax Passes Budget With Small Increase In Commercial Property Taxes
HALIFAX — Facing millions of dollars in cuts thanks to Covid-19, Halifax Regional Council has passed a recast budget that sticks to a small increase in the commercial tax rate and a freeze on the residential rate this year.
Council was on the cusp of passing a 2020/2021 budget before the Covid-19 pandemic. But thanks to the economic wallop caused by the virus councilors have spent the last month picking through this year’s spending looking for ways to save money.
As they’ve cancelled capital projects, laid off staff, and cut fire and police budgets, councillors have kept the city’s tax rates squarely in their sites, determined not to raise them further and put already struggling businesses and residents under further financial pressure.
Yesterday, the council officially approved a new budget that reduces the municipality’s overall spending by about $45-million and holds tax rates to their previously planned 1.4 percent increase.
The new budget sees the municipality spending just over $955-million this year, down from a little over $1-billion.
Council saved more than $52-million by cancelling capital projects like the Cogswell Exchange and made up for other lost revenue by reducing the fire and police budgets, not hiring for some vacant positions within the municipality, and drawing millions from the city’s reserve funds.
“While this is not the budget we hoped for at the beginning of the year, our municipality remains in a relatively good position,” Jacques Dube, the city’s chief administrative officer, said on June 9.
Cash Crunch As Taxes Come Due
The 1.4 percent bump in commercial tax rates this year means the average commercial property owner will be on the hook for an extra $585.
Dube said the bump is largely due to property values going up, but that the municipality did raise the commercial tax rate ever-so-slightly from 2.988 to an even 3.
The residential tax rate remained steady at 0.185, with rising property values accounting for the entire 1.4 percent increase in property tax bills.
And while the municipality did everything it could to keep tax rates steady for businesses and residents, collecting those taxes is still going to be a very big problem.
As of June 1, the city still faces more than $64-million in outstanding taxes. That represents about 17 percent of the city’s tax revenue, which is mountains more than the two-to-three-percent outstanding taxes the city normally faces at this time of year.
Dube said commercial taxpayers are actually doing okay for now. He pointed to the hotel industry, where 72 percent of property owners have already paid up.
However, the CAO is still predicting a $40-million shortfall in tax revenue by the final tax due date Oct. 31.
“The assumption is that some individuals or businesses that had not been significantly impacted at the outset of Covid-19 will be facing liquidity issues and those that had been significantly impacted may not be able to bounce back,” a staff budget report says. “This will be especially true if there is a second wave of Covid-19 as predicted and the economy is forced to be shuttered again.”
“The reality is we do not know what October is going to look like from a revenue point of view and 2021-22 and 2022-23 are huge question marks at this time,” Dube added.
Dube said the city’s upcoming budgets over the next two years will “no doubt be more challenging” than this year’s grueling rounds of cuts, as the city’s tax base shrinks as a result of the long-term fallout of the Covid-19 recession.
Dube said it’s “highly plausible” the city will have to dip even further into reserve funds to keep the city running in the coming years. Revenue will be way down, and the city can’t afford to borrow more money because paying back loans will mean higher taxes and a strain on service levels.