Can Midland council revisit this year's budget and render no tax hikes?
The answer was a resounding no at Wednesday's council meeting. It was in response to a petition, presented by three residents, asking town council to reconsider the budget for a zero per cent tax increase, instead of the 2.5% blended (county and education tax included) approved in February.
"We're not after operations," said Howie Major, who was accompanied by Yvonne Tietz and Rod Lundy. "We just want to see if there are other ways for us to get it down for the people of Midland."
Major said he had heard from several seniors on fixed income, businesses and families with children that were struggling to make ends meet. He contended that council should have tried hard for a zero per cent increase considering the economic effects of the pandemic.
"It's just the wrong time to raise our taxes," he said.
Adding to all of that, said Tietz, is the economic impact of the recently announced stay-at-home orders by the province.
"This is going to hurt a lot more people," she said. "It is going to hurt businesses and people will be losing their jobs.
"It would really really help if you could find the courage and compassion to lower our tax rate to zero," added Tietz. "We would respectfully remind you that back in 2018 when everybody ran for elections, the majority of your promises was to keep taxes at inflation or below it. Inflation today is 1.27% and 2.5% is double the inflation. We respectfully ask that you consider the promises you gave to your constituents."
Some suggestions Major and Tietz made for how council could lower taxes referenced the recent increased gas tax funding of over $1 million and the $309,000 for COVID-related funding received from the province. In addition, the two said the town could consider a hiring freeze on new positions this year, only replacing retirees.
Despite these ideas, the resistance to reconsider the budget was obvious in the responses given by councillors.
"Reviewing the budget, and the capital budget specifically, staff said they had it at $20 million and they got it down to $8 million," said Coun. Jon Main, acknowledging poverty in Midland. "It looks like it will be $30 million in the next few years. I know you're not in support of the increase and want to get to zero this year, that may mean we will have significant tax increase next few years. Any comment on that?"
Major said he understood the town cannot be run at zero per cent, but does it really have to be a 2.5% increase?
Tietz insisted the gas tax funding and safe restart money from the province should be considered in lowering taxes.
Mayor Stewart Strathearn set the record straight and explained why that couldn't be done.
"My understanding is the federal gas tax is earmarked for specific items and can't be used for other items," he said, adding it's money given to municipalities specifically for infrastructure projects. "Any of the funding we have received from either the province or from the feds is earmarked for specific spending allocations only.
"Other monies we get, like safe restart money, those funds you apply for and you have to account for every penny you draw down for them as COVID expenses in the operations of the corporation," added Strathearn.
Michael Jermey, chief financial officer, confirmed the mayor's explanation.
"If we take the federal gas tax as an example, we're getting a one-time doubling of funding, which wasn't contemplated in our budget," he said. "Those funds need to be used for capital projects. That million dollars doesn't do anything for our tax rate today."
Strathearn said council spent three long, hard days going through the budget line by line looking for savings, finding some in a few instances.
"Up to 1.71% of that budget is fixed cost," he said. "I know our insurance went up 40%-50%. The next thing is the 0.77% increase solely to pay the debt on King Street. We're talking almost 2.84% increase in the levy for obligatory payments. We said no to a position in one instance and the boards were able to hold the line."
Major asked if the town had reached out to other communities that had been able to put forward lower tax rates to understand how they'd done so.
"It's all political talk to me," he added.
That phrase made Coun. Cody Oschefski speak up.
"You keep using the term political speak and I think that implies dishonesty," he said. "I don't think that's fair to my colleagues. At the end of the day, there were three options, defer costs and put it on the credit card, cut services, or increase taxes.
"Unless you have some creative ideas that we missed during our meetings, this deputation is no more than insulting," added Oschefski.
Then he answered the question about conferring with neighbouring municipalities.
"You can go to your neighbour for sugar," said Oschefski. "But you don't go to your neighbour and ask them how they pay their bills. Your neighbour might have a different job than you do and different financial circumstances. Every municipality is different. We're not apples to apples. We all have different circumstances."
David Denault, chief administrative officer, presented the staff's perspective, too.
"There was a great deal of analysis done by our finance team and our entire management team," he said. "You also saw a 10-year horizon on your capital strengths. There are some bills that will need to be paid coming down the future. This council could have gone down to reserves to cover the tax levy, but the capacity isn't there to cover future expenses. We also don't have the growth that helps the tax base.
"We have to grow our way out of this situation," added Denault. "To do that, we have to do some reasonable investment to continue to allow this community to reinforce those assets coming at us."
As for freezing hiring, he said, he respectfully disagreed with the perspective the residents seem to have.
"I can point to the planning department that has zero staffing," said Denault. "We've been far too fragile for too long. We have not stopped delivering services during the pandemic and it is exhausting for them. We have to reinforce them."
Where most councillors stood by the budget as approved, Coun. Bill Gordon said he was willing to make one last ditch effort to ask staff to do some more work.
"The only thing left to do is if there's going to be any concensus to look at reducing services," he said. "I think we can get to this million dollars. I don't think it will be that much to ask. It may mean cutting some services. I believe we can get there. It may take a bit of pain then we're ready to take on."
Later in the meeting, Gordon asked if he could put forward a notice of motion regarding this option. However, the clerk pointed out the process had already ended with the approval of the budget and it would be out of order to try and bring it back to the table.
With that, the Gordon also abandoned the idea, telling residents to be more involved in the budget process that will commence at the end of this year.
