Seeking lower tax hike, Iqaluit council sends budget back for a re-write

Iqaluit city councillor Mark Morrissey, left, reports a list of expense items to cut from the city’s proposed 2014 budget to John Hussey, chief administrative officer for Iqaluit, and John Mabberi-Mudonyi, the city’s director of corporate services, at the close of budget discussions on Jan. 15. (PHOTO BY PETER VARGA)

Near the end of its fourth day of a line-by-line review of the city’s proposed budget for 2014, Iqaluit city councillors stopped dead in their tracks when they reached the bottom line: a proposed $3 mill rate increase on all property taxes.

This would not do.

Councillors Terry Dobbin and Noah Papatsie disapproved first, then other councillors followed suit.

“One of my things here (on council), was I wanted to try and give a tax break for everybody,” said Papatsie, at the Jan. 15 meeting. “Just to try and offset some costs of living. There’s a lot of people moving here and we’re growing by so many people each year. It would be a great idea to help out everyone.”

In the end, councillors turned the budget back to city administration with a list of expenses to cut in an effort to bring the mill rate down to $1 and ordered a revised list of property tax figures for Jan. 22.

The proposed mill rate increase – amounting to $3 per each $1,000 of a property’s assessed value – fell flat as the evening meeting went into its final hour.

Coun. Romeyn Stevenson, who led proceedings as chair of the city’s finance committee of the whole, was the first to admit he had never seen such a big increase in residential taxes in his five years on council.

“Things cost more money this year than last year, and we’re going to have to match that” with tax increases, he said.

“What we need to answer here as a council is are we comfortable raising the mill rate by $3 across the board.”

Council agreed to a six per cent increase in water rates, and a 10 per cent increase in garbage collection fees.

But the property tax increase of $3 per $1,000 of a property’s assessed value turned out to be too much.

Iqaluit’s mill rate on all properties – including residential, commercial industrial and institutional – has increased every year for at least the past five years, according to Stevenson, with the exception of residential rates in 2010 which did not change.

“Last year’s mill rate went up by 1.5, now we’re at three, so that’s double,” said Dobbin, who asked why the rate could have gone up.

The city’s chief administrative officer, John Hussey, reminded councillors that they cut nothing from the budget in the past four meetings, and added items related to the city’s communications plan and “risk management.”

Moreover, under council’s guidance the city added many expenses throughout 2013, including upgrades to equipment and staffing for emergency services and public works.

Pointing to the city’s extensive reserves, which include amounts for unfilled staff positions as well as for future projects, Coun. Kenny Bell asked whether council could take money out of these to pull down expenses and decrease the mill rate.

Hussey defended the importance of reserve funds, especially for future capital projects related to the city’s $30 million aquatic centre — which is only in the design stage — plans for a new fire hall and emergency services facility, and a new city hall.

The reserves are an essential financial foundation for projects, Hussey said, and they keep the city from having to borrow money at interest to fund them.

Once started, the city makes every effort to fund the projects by tapping into government funding, and tapping “into corporations that contribute to growth of the community,” he said.

“We have to start slicing somewhere. We haven’t said no to anything this year,” Dobbin said of the city’s growing expenses.

Coun. Mark Morrissey agreed, and made a quick calculation of how much the city would have to cut to decrease the mill rate by $1.

“To cut a whole point ($1), that’s $364,140,” Morrissey said. A decrease by two points worked out to about $729,000 by his calculation.

Councillors seized on a two-point decrease as a target to bring the mill rate down to $1, and made a quick run through the budget in search of items to cut, and some expenses to spread to 2015.

Morrissey took note of all items as councillors called them out. Among them were cuts to equipment and building reserves, and small expensive items listed under various departments.

These included cameras, a fence, a “GPS time synchronizer,” and a $6,500 Taser for municipal enforcement.

The list cut a total of about $894,000 from the budget, according to Morrissey, almost $165,000 more than needed to bring the mill rate down to $1.

Under Stevenson’s direction, council turned the budget back to Hussey for recalculation of the mill rates, given the expense cuts.

“None of this is set in stone,” said Stevenson, adding that council would meet again to review the revised mill rates and discuss the proposed cuts on Jan. 22.