City firm on taxes
Published Wednesday December 3rd, 2008
Grant | Province says municipalities need to look at bottom lines, consider cutting taxes
Fredericton finance committee chairman Mike O'Brien says thanks but no thanks to a suggestion from Business New Brunswick Minister Greg Byrne that municipalities consider cutting their tax rate because of big property tax assessments.
"Can we commit to any reduction? No," said O'Brien. "Do I accept that as constructive criticism? Well, I will take it as that."
Byrne made the comment in the New Brunswick legislature Tuesday during question period in response to queries about property taxes from the opposition.
"These are difficult times," said Byrne. "Our government is looking at how it practises restraint.
"I think it behooves municipal governments to do the same."
Byrne said he knows that municipalities have increasing operating costs. But while the consumer price index has risen 9.8 per cent in the past six years, some municipal budgets have increased by 40 per cent, 50 per cent, 75 per cent or even more, he said.
"Perhaps it is time to look at whether they can be a little more prudent in terms of how they manage their budgetary funding," said Byrne. "Perhaps they can give a break to the taxpayer."
The provincial government released the annual property tax assessment figures Friday. Fredericton's tax base for 2009 is up by 7.92 per cent, with the average assessment of a home in Fredericton rising by 5.1 per cent, said the department.
"I have a lot of respect for Greg and being a resident of the City of Fredericton I think he understands that we stretch a dollar about as far as any municipality in Eastern Canada," said O'Brien.
"We have a city of 51,000 people that grows to 85,000 in the day," he said. "We are providing services to our residents and to all the people who come here.''
He said council does a good job of providing those services to a growing city at a reasonable tax cost.
The city is working on its budget for 2009, which will be presented Dec. 17.
In other taxation news, Local Government Minister Bernard LeBlanc said the province would unveil its new unconditional grant for municipalities by the end of this week.
O'Brien said Fredericton received an unconditional grant of $5.8 million in 2008 and in the city's early budget planning, it planned for a two per cent increase as in past years.
"Right now, we are not assuming anything," he said.
A one per cent change in that grant would be $80,000. O'Brien is concerned that a cut may be coming.
"With all the belt-tightening they are announcing, it sounds like they are setting us up for some kind of change," he said. "I can tell you if it is a reduction, it is directly out of the city's pocket.
"We will respond to any challenge they give us, fair or unfair."
Local Government critic Jeannot Volpe said Tuesday he wouldn't be surprised if the Liberal government cuts the unconditional grant.
"I would be very concerned if I was in their shoes," he said. "I would say that some municipalities will see a major reduction to the money they are getting."
Volpe said Byrne may have been sending a signal about reducing the unconditional grant when he made the comments about municipalities cutting their tax rate because of higher assessments.
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The other element in local govenment funding is the grant from the province. In ten years this has dropped by over half, contributing to a need for more funds to come for the other funding source --local taxes. Most local governments have kept tax increases lower than the funds it has lost through grant reductions, mainly helped by an ever increasing assessment. The real question is what will happen next year when both assessed values and the grant will be inevitably be lower?