Wednesday, August 22, 2018 - 2:15 PM

Budget 2019 Preparations Underway

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The City of St. John’s has begun the process to prepare for the next three-year budget, 2019-2021.

Councillor Dave Lane, who has the lead for Finance, recently wrote a blog post outlining the challenges the City will face with this budget and why it is important for the City’s residents to get engaged in the process and understand how it is that the City funds the many services and programs it provides.

Did you know that the City’s operations are funded 75 per cent from property and water taxes, paid by both residential and commercial property owners? The amount of taxes an individual/company pays is based on the assessed value and the mil rate.

As Councillor Lane explains in his recent blog post, “The City is required by law to only have two mill rates: one for commercial properties and another for residential properties, no matter what level of service that property receives or the owner’s ability to pay for it…

“There’s a lot of debate as to whether this is a fair system, and I’ll discuss this debate in another blog post. But for now, it’s the system we have to use, and that’s a big deal for our upcoming 2019 budget,” explains Councillor Lane.

Property values are set every three years, with the current values based on assessments as at January 1, 2014. The upcoming budget is going to be based on values as at January 1, 2017, and we know that the economy has changed in the last three years which is having an impact on housing values. Although the assessment values have not yet been determined, preliminary numbers are indicating the overall assessment roll as a whole may decline. Of course, some properties may increase in value, so tax rates are a very individual thing.

What does this mean for the 2019 budget? The City predicts a shortfall in revenue that will require either a reduction in costs or a mill rate increase.

“And that’s the challenge we have before us as a Council and as a community,” explains Councillor Lane. “It’s a tough challenge, but we’ve already started the work to tackle it head on.”

After the 2016 budget, the City identified significant savings of over $13 million through a comprehensive Program Review. Since then, the City has also implemented a continuous improvement program to continuously find ways to reduce waste and improve service delivery.

“If we’re going to ensure we are all paying reasonable levels of taxation for a great level of service, we’re going to have to make difficult choices. And that will involve all of us coming together and making those choices together,” says Lane, who is encouraging comments and questions on his blog post.

In the coming weeks, the City will announce a strategy to talk with the public about these difficult questions, including online discussion through Watch your mailboxes in September for more information on our budget challenge and our approach to budget planning for the next three years.