After four days of deliberations, Yellowknife city councillors passed a 2.5 per cent tax increase in a city council meeting Monday.
The version of the 2021 budget passed by council includes cuts to the capital transfer — money that goes towards infrastructure projects, as well as cutting renovations on the Fire Hall, delaying the structural assessment of the Ruth Inch Memorial Pool and cutting the citizen’s survey.
The 2.5 per cent figure is much lower than the 11.92 per cent tax rate that had been originally proposed by city administration – a fee that would have allowed the city to run a balanced budget without any cuts.
Councillors chose from six options, with varying tax rates. They chose the sixth option.
“Option six is that balance between reducing the tax rate so it’s not the highest one in the list, but also being able to sufficiently transfer taxes to capital to help us build for those future core capital projects,” Mayor Rebecca Alty said during deliberations on December 3, “or we go to the bank and we borrow it all and we’re just gonna blow all our taxes in interest as opposed to programs and services.”
Option six assumed there would be a smaller transfer of money $1.1 million to the capital transfer – money sent towards infrastructure projects.
Cutting the capital transfer – the original draft budget had more than $1.2 million going towards the capital transfer – is a commonly used tactic to cut taxes, according to Sharolynn Woodward, corporate services director for the City of Yellowknife. But it can have long-term costs, by making less money available for infrastructure projects in the future.
Last week during budget deliberations, councillors passed a motion to include the GNWT’s COVID-19 relief funding and street outreach funding — run by the YWCA — in the city’s revenue projections.
The city has received verbal commitments from the GNWT about the street outreach funding, but city administrators warned they may not get the full amount the territory had promised.
“Typically a lot of the planning assumptions that we can make in putting the budget together, we had none of those guarantees this year,” according to Sheila Bassi-Kellet, administrator with the City of Yellowknife. She added the town has been “very conservative” with the budget, because of the disruption this year.
City councillors were also weighing how taxes could spike in the future, with a number of expensive capital projects coming, most notably the new aquatic centre.
City administration forecasted this would mean further tax increases in future budgets.
But Woodward said a number of projects may have their timelines bumped back a year, because of the disruption the pandemic has caused.
“We’re probably not going to get two years worth of work done in 2021,” Woodward said during deliberations last week. “We’ll do as much of that work as we can and as the budget allows.”