Austerity is coming to the HRM

The city will get worse due to dependence on oil and the housing bubble bursting.

Councillor Paul Russell chairs Sept. 21, 2022's Audit and Finance standing committee meeting.

Editor's note: The original copy of this story said the city was reporting a $3 million surplus for the first quarter. The city is in fact reporting a $3 million deficit, the story has been corrected.

The municipal audit and finance standing committee met this morning to discuss the grim future Halifax is facing. In the first quarter fiscal update, staff laid out the forecast. Normally the city sees a surplus of $10 to $15 million in the first quarter, but this year the city is reporting a $3 million deficit.

That deficit means the city will likely face a $54-million hole in the budget next year. The city's lack of money this year is not unexpected, but it is jarring. There’s an unforeseen war in Asia, which is restricting oil supply and oil robber barons have used that as an excuse to siphon $100 billion out of the economy, earning record profits for themselves. As a result of their greed, the HRM is paying more for fuel.

The deed transfer tax (AKA an administrative fee paid to the city to transfer the deed of specific parcels of unceded Mi’kmaw land from one owner to another) is unpredictable. In previous years, city staff have been warning council deed transfer tax money could not be counted on to fill budget shortfalls because when the housing market slows, this money will decrease.

click to enlarge Austerity is coming to the HRM
Deed transfer tax year over year changes for the past five fiscal years

The housing market is slowing, and this money has decreased. The housing market slowing also means the city is making less money on development fees because fewer developments are being built. In addition, corporate tax income is lower as working from home becomes a norm. Those factors, combined with previous councils’ lust for projects with dubious benefit—like the literal pit turned money pit: the Convention Centre—means this council is on the hook for a lot of money while revenue streams dry up.

The city will also be paying more than it budgeted to the RCMP this year and next.

“We’re not going to increase the budget this year, or I’m not,” said mayor Mike Savage at the meeting, citing the city’s tax increases in previous years. Savage said he’s not comfortable raising taxes, and that this year’s budget process will be filled with hard decisions. “We’re going to have to tighten our belt.”

Councillor Trish Purdy made an emotional appeal to the city’s finance staff, saying capital projects, not services, should be cut. “We can’t cut services to our residents while we’re expecting them to pay through th—higher taxes,” said Purdy. “Keep in mind our fixed-income seniors, our low-income homeowners and single-parent families who are just struggling.” A slight pause. “Struggling,” she repeated, almost to herself.

When the conversation switched to where the money might come from, councillor Paul Russell was adamant the city should not touch the emergency reserves, because that’s for real emergencies like COVID, not problems council made for itself with bad policy (see the aforementioned literal pit-turned-money-pit, the Convention Centre).

Russell also worries that the cost to pay city staff will increase because many city staff are in a union. Unions are very good at getting living wages and health benefits for their members, which in this case means more money the city will need to pay its workers so city workers don’t live in poverty.

The committee also approved taking an additional $100,000 from a reserve fund to pay for improvements to Unnamed Park 27, tennis courts in Bedford, improving the Auburn entrance to the Cole Harbour Common and upgrading a parking lot in Cole Harbour. The total value of the tender is $454,452.32.

Councillor Tim Outhit took this opportunity to grind his favourite axe, which must be finely honed at this point. His long-standing argument is that developers should be charged more to do these improvements as they develop, instead of the city doing them piecemeal later on out of the city’s reserve funds. Funds the city will be in desperate need of come budget season.

And finally, part of Larry Uteck Boulevard will be closed for three months while the city installs a roundabout. Outhit is very against shutting down a major artery for three months; he’s concerned about the traffic. West Bedford Holdings Limited is doing the work, and it will cost the city a minimum of $3.25 million to a maximum of $5,943,572.