Fiscal peril looms as HRM passes capital budget | City | Halifax, Nova Scotia | THE COAST
HRM's capital budget was full of big, long-term projects with fixed(ish) costs. But in the coming weeks, the really hard decisions start.

Fiscal peril looms as HRM passes capital budget

Council’s desired 4% tax increase isn't enough to sustain the city.

Editor’s note: During the budget process, each of the HRM’s business units (libraries, police, transit, etc.) will present their budgets and will (likely) ask for more money. When council approves each of these individual department budgets, they are only approved in principle pending the final vote on the budget as a whole. Unless otherwise stated, “approved” means sent to the final budget.

The budget committee approved Halifax Regional Municipality’s capital budget last week. Capital projects (for the non-civics nerds) are the big pieces of infrastructure the city needs or wants, like libraries, fire stations, arenas and large slabs of concrete that are only useful to cars. And this budget debate, like most in recent years, was fraught due to the sustainability elephant in the room.

Halifax council is again trying to grapple with the fact that the city doesn’t have enough money to do everything it wants to do and everything it needs to do. It is the very definition of unsustainable (adjective : un·​sus·​tain·​able : ən-sə-ˈstā-nə-bəl : not capable of being prolonged or continued). And continued, deliberate unsustainability is putting people at risk in a very real way.

For example, people who live in the Larry Uteck area are at a higher risk of losing everything to a fire than people in the city centre. Halifax fire chief Ken Stuebing told the budget committee that there is a safety standard for emergency services. When a population hits 100 people per square kilometre, it needs its own emergency services. The people in Larry Uteck hit that density, but don’t have a fire station. Since misery loves company, and the city’s patterns of unsustainable growth are not limited to Larry Uteck, the HRM’s fire services also can’t respond quickly enough in Bedford, Sackville, Eastern Passage or Spryfield. Hammonds Plains will soon be on that list. An elevated risk of death and destruction and higher fire insurance premiums are just some of the hidden costs of tax reductions.

And to be clear, this is not a dig at Halifax’s firefighters any more than it’s a dig at any goalie who plays behind a bad team. If the people in front of them are failing, the math says that eventually, they will too. Unfortunately, the math is never wrong.

“I find it amazing that we debate whether we need to build a new fire station or not,” said councillor Patty Cuttell at the Jan.18 budget meeting. “Things like that shouldn’t be a political decision of council. It should be a safety standard.” But if council were to adopt a safety standard, that would be a political decision. How the government spends tax money is explicitly political. Collecting our money and spending it on making our lives better is the main function of governments in Canada, at least in theory.

What Cuttell may have meant is that public safety should not be a matter of debate—but it has to be, because public safety itself is up for debate. Some of Halifax’s libraries are on the slow-death-by-neglect chopping block. Councillors Lindell Smith and Sam Austin spoke passionately about the need to save the libraries in their respective districts. And Tim Outhit spoke about the need to actually get around to building the promised library in Bedford. Libraries, as pointed out by Austin, are one of the few spaces left in this world where people can exist without spending money. They form a vital barrier between a city’s most vulnerable people and their jailors. They are one of the city’s only proactive public safety measures, and they are in danger of disappearing.

HRM council has for years been following the capitalist development philosophy of “growth pays for growth.” If the implementation of that political philosophy were rooted in reality, then there would be no shortage of critical infrastructure like libraries or fire stations. But there are shortages of critical infrastructure.

There are a lot of reasons why growth hasn’t paid for growth in Halifax, but the big one the budget committee talked about was the lack of development fees charged to developers. When Halifax approves a development, the city doesn’t incorporate fees for the expansion of municipal services required by the development. What that means in English is that when a building goes up, people move in, and those people need things like libraries, buses and fire stations. The city does not charge developers enough to cover the cost of adding the public services required by their proposed developments.

Practically speaking, since we are paying for the amenities of development instead of developers, it means that we are subsidizing the profits of developers. They, in turn, are using those amenities that we pay for as a reason to charge extortive prices for their publicly subsidized private development. Low development fees mean more profit for developers and higher taxes for us.

The budget committee voted to get a staff report to help figure out how to get the funding back into the libraries, and that passed with only councillors Becky Kent and Trish Purdy casting the two bad votes against public safety.

The committee ultimately voted to approve the capital budget with a minor reduction to the urban forestry plan, mainly due to lack of capacity for the city to plant more trees.

But the fact of the matter is that the city’s expenditures are increasing by somewhere between 7% and 10% per year. If our taxes don’t keep up, we will fall behind. With the 4% tax increase council is currently aiming for—instead of the 8% increase staff initially recommended—we will only fall further behind.

The capital budget discussed last week is full of big, long-term projects with fixed(ish) costs. And in the coming weeks the really hard decisions start. If council wants to commit to making the mistake of keeping taxes low, it will start with the business units’ operations budgets.

This week the committee will get a reprieve from hard decisions. This week it’ll be getting a presentation from the city’s bean counters who will, very politely, very professionally and very mathematically explain why keeping the tax increase at just 4% is a big mistake.

The bean counters will say things like: “Changing the revenue increase from 8.0% average tax bill increase to 4.0% creates a gap of $25.1 million between revenues and expenditures in 2023/24.

And: “...to meet the [4%] motion, $15.3 million of reductions need to be found to balance the budget in 2023/24, and the total reductions need to carry forward into future years as $23.3 million of sustainable reductions.”

And: “Meeting the remaining $13.5 million of reductions will require service changes across business units. Staff have felt it prudent to put these proposed service changes to Budget Committee to decide to move forward with the changes or not. Overall, staff have identified a list of sustainable reductions that total over $20.4 million in 2023/24 and these reductions can reach $33.8 million in 2024/25. The total of the proposed reductions exceeds the required decrease in the budget to achieve the 4.0% average tax bill increase.”

And: “All proposed reductions are included in Attachment 4.” (Page 88 of the pdf)

Councillors who vote to keep the tax rate low, who vote against increasing revenue, or who vote to defer hard decisions instead of making hard cuts are bad stewards of public trust. They are asking us to deal with a worse financial problem later—in three or four years’ time, when their term is up and someone else has to make an even harder call than the decision before councillors today. Any councillor who votes to kick this problem down the road isn’t worthy of the public’s trust.

About The Author

Matt Stickland

Matt spent 10 years in the Navy where he deployed to Libya with HMCS Charlottetown and then became a submariner until ‘retiring’ in 2018. In 2019 he completed his Bachelor of Journalism from the University of King’s College. Matt is an almost award winning opinion writer.

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