City finds ways to save $1M, still faces challenges
The City of Saskatoon has come up with ways to save more than $1M in the 2018 budget but still faces challenges to shrink a 6.48 per cent tax hike. On Monday, council will look at several updates, Phil Tank writes.
INNOVATION TEAMS
The city has created innovation teams to find more cost-efficient ways to deliver services. They found more than $1 million in savings, including $318,000 in insurance costs. The savings will reduce the property tax increase to 6.48 per cent. The teams will continue to search for operational savings since council has expressed no appetite for such a high property tax increase. The tax increase only accounts for the cost of maintaining current service levels. Property taxes increased by 4.82 per cent in 2017.
CHIEF CULPRIT
The main reason for the projected property tax hike of nearly seven per cent is an expected $6.1-million reduction in revenues from the province. This includes less money from revenue sharing and the elimination of some grants-in-lieu of taxes. The Saskatchewan Party government and the city continue to negotiate a replacement program for grants-in-lieu to account for services the city provides for provincial buildings and infrastructure. Much of the rest of the increase can be attributed to inflation. How dire is the decline in revenue? The city’s revenue is expected to decline by $1.6 million in 2018 after increasing by $16.27 million in 2016 and $4.98 million in 2017.
REVENUE REVERSAL
In addition to inflation and reduced provincial money, the city continues to struggle to reach its revenue targets in four areas: landfill fees, traffic tickets, transit and recreation centres. The landfill is making less money than expected through fees because fewer loads of garbage are being taken there. A City of Saskatoon report attributes this to competition from other landfills. Transit is not making as much as expected because ridership has flatlined. Automated enforcement of traffic violations has made motorists less likely to risk a ticket. Finally, an initiative to get more people to use the city’s recreation centres by slashing the cost of passes two years ago has attracted more people, but revenues remain lower than expected.
SOME GOOD NEWS
Saskatoon is still growing, which means more people and business are paying property taxes. The city expects to collect $15.37 million more in property taxes in 2018. It’s also expecting $3.2 million more due to assessment growth. That number won’t be confirmed until final growth numbers are confirmed in the fall.
TAXING TREND
The city is relying more on property taxes to pay the bills. In 2015, Saskatoon paid for 43.5 per cent of its total budget with property taxes. In 2017, that share had climbed to 46 per cent. Council members and city hall staff have repeated the need to find other revenue streams so the municipal government does not have to rely so heavily on property tax. During those same three years, money from external sources, such as the province, has declined from 20.6 per cent in 2015 to 18 per cent in 2017. The city will collect $219.89 million in property tax in 2017, up from $192.77 million in 2015. The city’s total revenue rose from $443 million in 2015 to $477.65 million in 2017.
OPTIONS AHEAD
To avoid an unpalatable tax increase, city council and the administration have limited options since they cannot by law run an operating deficit. City hall staff plan to present options for decreased service levels in various areas to make up the difference. Coun. Randy Donauer has questioned the need to consider reduced service levels before every effort to find other cost savings has been exhausted.