Halifax facing $60 million budget shortfall
Bad decisions and unsustainability haunt council
by Matt Stickland
The city of Halifax’s annual budget season officially kicked off last Wednesday, Nov. 19, with an update on the HRM’s dire fiscal position.
The city of Halifax has not been sustainable since before amalgamation, and it runs a multi-million-dollar deficit every year. For example, since the price of everything is going up, if the city wants to fund all the same services it did last year, that’s an increase of $88.9 million.
There was an increase in property values and growth, which netted the city about $25 million, and the city earned about $7 million in new non-tax revenue (e.g. user fees), leaving a shortfall of about $57 million.
To make up the difference, property taxes need to increase by 10% to cover the city’s annual multi-million-dollar shortfall caused by the HRM’s land-use bylaws.
Because the city’s unsustainability is politically popular, every year the city runs at a multi-million dollar loss, and because not raising taxes is also popular, the city has borrowed and plans to continue borrowing a total just shy of $2 billion to cover Halifax’s annual multi-million-dollar capital and operating losses.
So because council has not made the city’s development, or land use, or transportation sustainable, we are borrowing almost $2 billion by 2030 to cover the cost of running Halifax and catch up to our growth.
To cover the cost of that borrowing, property taxes will have to increase by at least 43% by 2030. All of this spending is to keep what we have or to slowly expand municipal services, which have fallen far behind what the city needs to accommodate our growth.
But there is good news on the horizon for Halifax’s fiscal woes, at Tuesday’s regular meeting of council they decided to pass two motions to try and reduce expenses and increase city revenues while decreasing the tax rate.
The first is the Service Review Framework, which has directed staff to see if we could change the way the city provides services to save ourselves some money. Amalgamation served a similar purpose, it saved the former cities of Halifax a lot of money by wiping out about $400 million in debt within a few years of becoming the HRM. And by finding efficiencies by amalgamating municipal services. Although not exactly the same as amalgamation, other cities who have done a service review saved three to eight dollars for every one spent on their service review.
The other aspect of this framework would be to look at a proposal in the Canadian Centre for Policy Alternatives’ pre-election report from 2024, which said that the city could probably save a lot of money by bringing services in-house that private contractors provide right now, like snow clearing or garbage collection. Council will get a report back about this in the near future, and this report has the potential to make serious progress in making this city more fiscally sustainable.
The other big motion that passed at Tuesday’s council meeting and intends to hoist the city out of its fiscal hole was the HRM Corporate User Fee Policy and Strategy.
One way the city can avoid raising taxes is to start charging or increase user fees, like parking fees, developer fees, or Canada Games Centre memberships. The city charges very low user fees, which makes the city reliant on raising property taxes to pay for city services.
And fees can be used to change behaviour, for example getting rid of library fines increased library use, and increasing parking fees raises revenue, could lower taxes, and reduces the number drivers which makes roads safer.
Inefficient land use, low taxes, and low fees are the three pillars of Halifax’s fiscal unsustainability.
Like attempts in 1997, 2007, and 2021, this council is once again trying to decrease its reliance on property taxes. But thanks to the city’s unsustainable land-use zoning, keeping taxes and fees low for the past 10 years has led to heavy borrowing, and that’s why taxes will need to spike by 2030. To make up for the past decade of lost revenue and lack of investment in ourselves.
At the first budget meeting of the year on Wednesday, council made more attempts to fix their fiscal hole, and that came in the form of a motion from mayor Andy Fillmore. He put a motion on the floor to ask for staff reports on potential cuts and raising fees this coming budget year, ahead of the just-passed User Fee Policy motion from the day before, which is not expected to have a significant impact on next year’s budget.
But putting a motion on the floor was not allowed, so after a prolonged deliberation with the city’s top lawyer, clerk, and accountant that forced council into an early lunch, Fillmore came back with an amendment to do the same thing as he intended with his disallowed motion.
The amendment, which passed, is specifically going to get staff reports about: “Reducing Contribution Agreements and Grants funding; Proposing fines and fee increases; Analyzing staffing levels; Reviewing previous council decisions that have not yet been operationalized (including from 2025/26); Adopting the service reductions included in attachment 1; A 10% cut to program grants; Freezing contribution agreements to 2025/2026 contribution levels; Reducing the Strategic Infrastructure and Climate Action Fund by one-third; and; The cost/benefit of a hiring freeze.”
And councillor Trish Purdy asked for, and got, a motion to look at infrastructure spending to see if there was anything we didn’t absolutely have to build next year.
She tried the same thing in 2023 with the city’s fleet vehicle purchasing habits. As she mentioned in her comments in support of her motion, she doesn’t think the city needs to build cost effective and efficient private vehicle lanes, but instead she thinks the city should build crazy expensive, wildly inefficient private vehicle lanes in the name of fiscal responsibility.
Purdy does this because she says she does not believe the objectively true facts in the city’s budget and Integrated Mobility Plan, which say that car lanes are what is causing congestion and the city’s fiscal unsustainability. Purdy is on record saying that she rejects the city’s reality in favour of personal anecdotes, and as a result she believes that the city’s car lanes, which are bankrupting the city, should be kept in the name of fiscal responsibility.
But luckily, Purdy left her motion much more open-ended, instructing staff to look at all capital spending from the cost-effective bike lanes to the city’s budget-ruining car lanes.
It should also be noted that, during the debate on Fillmore’s motion, councillor Laura White asked Fillmore if he would consider an amendment that made staff look at service cuts and fee increases that are “in line with council’s priorities.” Fillmore said no.
As reported in The Coast’s Otago Drive series in December 2023, in the realm of transportation, council’s priorities actively work against each other. For example one of council’s priorities is “a SAFE & ACCESSIBLE INTEGRATED MOBILITY NETWORK” which is defined as “A well-maintained network supports all ages and abilities by providing safe, flexible and barrier-free journeys throughout the region.” However, spending over $60 million a year on a well-maintained barrier-free network for drivers means we have an unsafe network for bike-riding kids and walking seniors. Achieving half of council’s priority prevents the city from ever reaching the other half of the very same council priority.
In response to White’s request, Fillmore also pointed out that the priorities, like a safe and accessible network and its definition, were from the last council, not this one.
One of the three reasons the city exists, according to clause 7A(c) of the city’s charter, is to “develop and maintain safe and viable communities” which has historically been impossible because council’s priority of an accessible mobility network for drivers has made our transportation system fatally dangerous and made the city at least $60 million a year short of being a fiscally viable city.
Now that staff have been specifically instructed to ignore council’s priorities, and since staff have been instructed to find savings and revenues and efficiencies, and because staff are still obligated to obey the charter, our council has essentially just instructed city staff to suggest a lot of cuts to Halifax’s private automotive subsidies and private car lane spending.
At Wednesday’s budget meeting, on top of the stuff mentioned already, council asked for more stuff from attachment 1 to be added back. They asked for a briefing note to add security to public parks, add two Intimate Partner Violence RCMP officers, but declined to add an RCMP station in Eastern Passage to the budget.
Councillor Nancy Hartling also got a motion passed to make the city add $3 million a year to its emergency reserve fund, which is running really low. The budget committee also declined to add security guards to Halifax Transit’s budget.
And on Friday, councillors added firefighters for Sackville, a volunteer firefighter coordinator, transit security officers, raising parking fees, raising development fees, the RCMP community office in Eastern Passage (on Wednesday they voted not to add it directly into the budget), ditto the extra Transit security guards rejected on Wednesday, and beefing up museum support to the Budget Adjustment List debate scheduled for the spring.
Then, once all of the debate was done, councillors decided to re-do all of those votes again just to make sure that everything they had passed in the first week of budget season was all stuff they wanted city staff to spend time working on. And this time, “in line with council priorities” was included in Fillmore’s motion, so we’ll have to see how that instruction to staff plays out.
Budget season will continue on December 9 with the Capital Budget Preview and Advance Tender Approval debate. This meeting should start to see the effects of councillor Trish Purdy’s infrastructure spending review motion from Wednesday’s budget meeting.
The public participation budget meeting is on January 27 at 6 p.m.
The Other Stuff
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