Rough road ahead for city finances
“Slightly higher taxes and somewhat rougher roads” could describe the city’s budget proposal, which is largely unchanged from 2018 except for a significant decrease in infrastructure spending. Highlights included:
- A 2.33% property tax increase.
- Nearly $30 million less in spending on road repair.
- A small reduction in the business tax (from 5.14% to 4.97%) and an increase in the rebate threshold (to $33,900) to hold overall revenue at the same level as last year.
- The creation of a standalone Department of Innovation, Transformation, and Technology.
- A one-point reduction in the dividend transferred from water and utility rates to general revenue.
- No new fees, and all business-related fee increases are at the rate of inflation.
- $3.15 million to purchase driver safety shields for transit buses
The city indicated the reduction in road spending was a consequence of the uncertain funding arrangement the city has with the province around capital projects.
The status of the city-province relationship has become an increasing concern for the Chamber. We know that Winnipeg can’t be successful without Manitoba, and Manitoba can’t be successful without Winnipeg. It’s important for both sides to work together on a long-term funding agreement that provides certainty for government, industry and the public.
Over the coming months the Chamber plans to spark a conversation about what a new provincial-city funding framework might look like. As part of our work with the Canadian Global Cities Council we have already talked about the need for a national urban strategy (link – https://globalcitiescouncil.ca/national-urban-strategy/) that provides new funding mechanisms for municipalities.
Read the full city budget here – www.winnipeg.ca/budget
Province pitches tax cut
Meanwhile, the province released a budget that could be summed up in three letters: PST.
The Pallister government will fulfill its election promise to reduce the PST by taking it down from 8% to 7% effective July 1, 2019. The move is expected to cost the province about $325 million in forgone revenue, but will clearly be a positive for consumers and will help to reduce input costs for business.
Other provincial highlights include:
- The projected deficit is down to $360 million.
- The amount budgeted for the film and video production tax credit has nearly doubled, to $31.5 million.
- Federal transfers are up about $324 million compared to 2018-19.
- Spending is flat, with an overall increase of only 0.3%, and small reductions in funding for infrastructure and post-secondary institutions.
“This budgets feels like the warm-up act to the headliner in 2020,” said Loren Remillard, President and CEO of the Winnipeg Chamber. “We’re pleasantly surprised at the early PST cut, the tax credit changes will help grow the cultural sector, and the continued reduction of the deficit gives the business community confidence.”
However, Remillard noted a few areas for improvement.
“We’d still like to see a commitment to a comprehensive tax review commission rather than tweaking individual rates. There’s no progress on improving access to capital for growing businesses. And the reductions to post-secondary and highways are concerning – these represent the human capital that local industry needs to grow, and the infrastructure to get products to market.”
Read the full provincial budget here – www.gov.mb.ca/budget2019/