City council headed into a fourth night of deliberations for Budget 2021 Thursday uncertain if its property tax rate would be lowered below two per cent, as many councillors have been aiming for this week.
“I feel like everyone was all over the place to deliberate a number of different scenarios ranging from a tax rate of 6.129 per cent all the way down to 1.645 ,” said Mayor Rebecca Alty said on Thursday.
images courtesy of the City of Yellowknife
As of Thursday, council had roughly calculated next year’s property tax rate to be 4.08 per cent, down considerably from November when the city had projected an almost 12 per cent increase to cover municipal operations next year.
Uncertainty lingered late this week, however, as it remained unclear whether the Government of the Northwest Territories would follow through on community funding commitments as part of its mandate.
“The GNWT has given us verbal notice on $855,000 but has not come through with the written (confirmation),” Alty said, adding that it's also uncertain if that money will be directed toward capital funds or to water and sewer.
It comes down to whether council wants to approve a budget with confirmed revenue or based on verbal assertions from the territorial government.
Council will then need to decide if it wants to transfer capital funding to lower the tax rate further.
“So whether we want to add that assumption to the budget or be conservative – it might mean a lower tax rate comes through in two weeks time," the mayor said. “We know we are going to be receiving funding. We just haven't received an official copy of it and we generally only include official revenue in our budget. We don't include anticipated revenue for government grants as best practice.”
The anticipated $855,000 is based on a study in 2014 when the GNWT recognized that it was underfunding 23 of 33 community governments.
Current MLAs have made a commitment to restore at least a portion of that funding with $2.5 million shared among those communities, Alty said.
The city has also received a verbal confirmation from the GNWT for $130,000 intended for Yellowknife's street outreach program. Council heard because that item is an operating cost, that money will automatically mean a decrease in property taxes.
“Those funds will not be transferred to capital, those funds will offset and reduce the property taxes that we need to see for 2021,” said senior administrative officer Sheila Bassi-Kellett.
Eliminating transfer to capital
Sharolynn Woodward, corporate services director, proposed last month the elimination of transferring taxes to capital as a way to lower the property tax rate. She proposed that withholding $1.26 million would mean a 3.88 percent impact on tax rate change.
That is something still to be decided by council. Among the concerns over that approach is that potentially affected capital projects could include repairs to water and sewer lines, expenses related to the new aquatic centre, regulatory upgrades or the need for new buildings like a sewage treatment plant.
"We deliberate on capital and we deliberate on operating and then we figure out what our potential tax rate is," Alty said. "Then we'll decide if we want to decrease the taxes further by decreasing the taxes going to capital."