Halifax councillors are aiming for lower taxes while considering taking on more debt after a budget committee meeting on Friday.
In November, Halifax regional council’s budget committee voted in favour of a fiscal framework from finance staff that would build the municipality’s 2022-2023 budget around a 5.9% increase to the average property tax bill.
Unlike other municipalities, Halifax frames its annual changes to property tax with that average increase, not the change to the tax rate. That approach accounts for rising property values, acknowledging that if the tax rate stayed the same, actual tax bills would rise.
When staff built that November fiscal framework, they were estimating the average taxable residential property assessment in HRM would increase from $252,100 to $262,700. Staff recommended raising the tax rate slightly, from 0.813% to 0.821%. That increase translates to 5.9% on the average residential property tax bill, equal to $121 annually. For properties assessed at more than $262,700, the increase would be more, and vice versa.
When HRM got the assessment roll for 2022, in late-December, the increase was more than expected. The average taxable residential property assessment in HRM is now $270,000, up from $252,100, so finance staff came back to council’s virtual budget committee meeting on Friday with an updated fiscal framework.
The new proposal is to cut the tax rate, from 0.813% to 0.797%. While that could be presented as a tax cut, that’s not how HRM presents it. Rather, the municipality’s finance staff presented the change to council as an increase to the average residential tax bill of 4.6%, or $94 (again, it’s more for properties assessed at more than $270,000, and vice versa).
For commercial properties, the outcome is the same — a 4.6% increase to the average bill — but the rate would increase, from 2.953% to 3.105%. That’s because the average commercial property tax assessment dropped from $1,469,000 to $1,462,000. The increase to the average bill is $1,989.
Climate action tax stays
Of the original 5.9% increase, 3% was billed as a dedicated climate action tax to pay for projects under HalifACT 2050, the city’s underfunded climate change action plan. The money would pay for electric buses and fleet vehicles, retrofitting municipal buildings and more. With the lower increase, staff are still planning to break out the 3%, even displaying it as a separate line on tax bills.
Chief administrative officer Jacques Dubé described the plan to list the climate action tax separately as “transparency.”
Deputy Mayor Pam Lovelace said she was “profoundly disappointed” in that framing.
“I don’t appreciate having a separate line on my tax bill for climate action. I don’t have a separate line for parks maintenance, they don’t have a separate line for roads,” Lovelace said.
“I don’t think that’s the right approach considering internally we are fully embedding the work and the day to day business that we do recognize that HalifACT is the right way to move forward.”
Coun. Trish Purdy, who is opposed to any increase to the average property tax bill, inadvertently illustrated why separating out the climate tax is problematic.
“I’m naive, this is new to me, so I’ve been trying to read about climate change and everything,” Purdy said. “From what I understand climate change is a global issue. Global. So, one little municipality is not really going to impact climate.”
It’s a nation-to-nation, to be hashed out on the global arena type of thing, like there are huge polluters and carbon emitters. Like that’s where it needs to be addressed, by my small little understanding. And our federal government already taxes all of Canadian citizens with the carbon tax, which is going to be raised to 11 cents per litre of gasoline on April 1, by the way, along with every other goods and services. Our residents need to live. Prices are going up which we’re all aware of. So isn’t it redundant to tax our residents a climate action tax when the federal government is already doing so? And what is the impact versus the cost and the burden to our residents?
Purdy’s comments contain some misleading statements: Nova Scotia doesn’t participate in the federal carbon tax program, as it opted for its own cap and trade system; the increase to 11 cents per litre referenced applies to provinces in that federal program and to British Columbia, which had its own carbon pricing before the federal government imposed it on some other provinces; and it’s worth noting there are federal and provincial tax credits in most jurisdictions that partially offset carbon pricing.
Dubé told Purdy that reducing carbon emissions is every jurisdiction’s responsibility.
“This is everybody’s business. Everybody has to do their part in order for us to be successful in terms of reducing climate change,” Dubé said. “We have a moral, environmental responsibility, and a financial responsibility to ensure that we’re reducing, as a municipality, our emissions.”
According to HalifACT, every dollar spent on climate change mitigation now will save HRM $6 in the future.
Environment and climate change manager Shannon Miedema offered to host a lunch and learn to educate councillors on climate change, but summed it up succinctly during the meeting:
Bottom line, we’re going to be paying for climate regardless of whether we’re proactive and follow a plan or if we’re reactive and responding to emergency situations and impacts going forward. And so we are yes, relying on all of municipalities in the entire world. All the cities, all the countries, the entire global community needs to recognize that everyone has a part to play. If we use the mindset of, ‘Well, others are bigger than us, they’re going to do it, we don’t need to’ … we will fail, and we will have a very uncertain and wild climate system for our globe going forward that is very scary, and the world scientists are saying we really don’t want that. There’s going to be huge loss of life, huge infrastructure damage, there’s going to be displacement of people. And so we need to stave this off by keeping within a certain amount of warming, which is one and a half degrees from pre-industrial times.
More debt, less tax
Mayor Mike Savage, who argued in favour of a 3.7% increase to the average tax bill in November, said he could support the 4.6% plan for now. He also argued in favour of taking on more debt to pay for the city’s projects.
“I’ve always been a fan of reducing debt and building up our reserves. But you do that for a reason,” Savage said. “And to me, there is no better reason to do that than to future proof our city, to build a better city and the HalifACT and the investments in climate seems to me to be the perfect thing for which the use debt.”
Councillors voted in that direction, opting to plan increase debt by $56.1 million for 2022-2023 while sticking to that 4.6% increase to the average tax bill. Purdy was the sole vote against the motion.
The increase in debt may allow council to pay for all the projects it wants to start in 2022-2023 without a further cuts or tax increases. It’s still early in the budget process. Nothing is final, and councillors are likely to add and remove items over the coming months as each department presents to the committee.
The budget is typically finalized in early April.