Council ponders budget
City council will be presented with several options to reduce a tax hike for the average Niagara Falls homeowner.
During its Jan. 13 meeting, council directed staff to report back with options to bring down a proposed 2.4 per cent levy increase.
When council was presented with the proposed 2018 operating budget, the city was facing a $1.6-million difference between proposed expenses ($135,056,601) and projected revenues ($133,458,578).
Finance director Todd Harrison said the plan would maintain core service levels with additional expenditures due to council priorities.
The budget included the impact from an anticipated fire contract settlement; an enhanced preventative maintenance program; multi-year transit enhancements; and increased resources for park/ street maintenance.
Harrison said the plan also included new staffing, identified revenue reductions in user fees and grants, and included strong assessment growth from 2017.
New proposed positions included additional bus operators; two seasonal employees for turf fields; a supervisor of infrastructure; and an additional bylaw officer.
There were proposed increases to fee-for-service groups, including Chair-A-Van, Niagara Falls Library, and Niagara Falls Humane Society.
Staff was scheduled to report back this week with four options, but the presentation was deferred until the March 27 meeting because four councillors were sick.
In the latest budget report, staff recommended option one — the original proposal — which would cost the average taxpayer $63 (1.9 per cent) more this year.
Option two — which staff said it would recommend if its preferred option is not chosen — would reduce the tax increase to 1.5 per cent, meaning the average homeowner would pay $49 more this year.
To do that, the city would reduce the budget $593,000 by altering operating expenditures or revenue based on improved estimates, reduce transfers to reserves to mitigate potential liabilities, and increase allocation of inter-fund transfers.
The largest cut would be to reduce allocations to reserves for pending tax appeals by $400,000.
Option three would lead to a zero per cent tax hike.
To do that, the city would have to make further reductions than in option two, including deferring $530,000 worth of transit enhancements; $190,600 in new hires for the fire department; reducing the fleet reserve by $150,000; and a $134,000 reduction for fee-for-service groups.
Staff said by reducing the budget by $1.6 million, the gross levy would be equal to assessment growth, resulting in a net levy of zero per cent.
Staff said this option, which they didn’t recommend, would be contrary to the direction of council’s strategic priorities and in many cases only defer these issues to future years.
Option four, which staff also didn’t recommend, would largely wipe out the city’s remaining $1.9-million casino-hosting reserve fund to offset any tax increase.
Staff said since 2013 under a new Ontario Lottery and Gaming contribution agreement, council established priorities for where it would use the more than $20 million it receives annually for hosting two casinos.
The priorities included tax relief/subsidy; hospital investment; economic development initiatives; policing fee-for-service for casino; and capital infrastructure improvements.
Historically, council has allocated $5.9 million (9.7 per cent) to tax relief/subsidy.
Staff said for 2017-18, $12.9 million is being allocated to capital budget projects; $5.9 million to tax levy relief/subsidy; $4.2 million to pay for casino policing; $829,000 for economic development/Niagara District Airport/Winter Festival of Lights; and $526,600 for annual contribution to the reserve for a new hospital.
That leaves $1.9 million available.
Staff said while council could allocate that money as an additional one-time tax relief to property owners, it would not address the city’s capital infrastructure deficit, would risk future tax increases, and limit future economic development and hospital funding.
“I can talk about an infrastructure deficit that people don’t see, but it’s there and these are things that need to be fixed now,” Harrison said in an interview with the Niagara Falls Review.
“It’s like everything we do here, there’s a series of priorities, but council has to decide and they make the final decision.”
He said the last four budgets have been based on council priorities established at the beginning of its term “and we’ve delivered on them.”
“Transit enhancements has been one of those things — it’s been gradual. If you look at the increase in the operating budget, transit expenditures has increased over the four years, which is consistent with what the mandate has been.”
Harrison said with the budget being deferred until the March meeting, other alternatives may be presented if new information becomes available.
Coun. Victor Piet range los aid while council understands the breakdown of where the casino-hosting funding is allocated, he doesn’t believe it’s clear to residents.
“I think that somewhere along the way the fact that taxes are subsidized to the tune of $6 million kind of gets lost,” he said.
“I don’t believe that residents actually have the benefit of opening up their tax bill one year and saying, ‘Wow, look at that, the amount of tax that I pay is reduced because of the fact that the city has this agreement with OLG.’”
Pietrangelo said he would like residents to understand the amount the OLG contribution subsidizes the city’s budget.
“There’s $6 million annually that’s going into our operating budget that subsidizes taxes. If you think of that from a tax increase perspective, $6 million represents anywhere between nine and 10 per cent. If you think of your total tax bill, take 10 per cent and think that’s how much I’m actually saving on my taxes.”
Harrison said staff will come up with a solution, but it won’t be labelled on the tax bill itself because that is “legislated by the provincial government and to show that on the tax bill is not something that’s allowed by the regulation.
“We will come back to council through the budget process, but also a report, that gives you maybe some other alternatives that we could show that.”