Halifax facing $60 million budget shortfall

Bad decisions and unsustainability haunt council

City staffer Dave sits as mayor Andy Fillmore, A/CAO Brad Anguish and lawyer John Traves try and fix Fillmore’s motion. Photo by: Matt Stickland

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.