If Halifax regional councillors make all of their proposed changes to the budget, the average property owner will be looking at a 6.2% increase to their tax bill later this year.
For the residential tax rate, that actually means a 4% decrease. That’s because the rise in assessment values for 2023-2024, sometimes called the lift, is so high that HRM can collect more revenue with a lower tax rate.
Tyler Higgins, manager of budget and reserves, brought those figures to council’s budget committee on Friday, noting they still have to debate the Halifax Regional Fire and Emergency budget next week.
“If you were to approve the budget adjustment list in its current state, sort of ignoring any other changes, it would result in a 6.2% increase to the average tax bill,” Higgins told councillors.
The rate would drop from 0.762 cents per $100 of assessed value from 0.794. This is HRM’s portion of the urban residential tax rate. Provincial charges through HRM, for education, jails, and housing, are extra.
$133.87 on the average residential tax bill
Per Higgins’ slides, the increase to the average tax bill would be $133.87. That bill is based on the average residential property assessment of $301,100, up 10.7% over last year.
For the average commercial property, the 6.2% increase would be an extra $2,835.10. The commercial rate would be $3.045 per $100 of assessed value, down about 2% from $3.105.
The numbers are based on the budget adjustment list. That list comprises the budget options councillors have so far voted to consider later this month.
For instance, councillors have voted to consider a $300,000 increase to the Halifax Public Libraries budget; a revenue increase of $800,000 by charging more for parking; and an extra $125,000 for arts grants.
Higgins told councillors if they only vote for budget reductions and revenue increases, like the extra parking revenue, they can bring the average tax bill increase down to 5.2%.
Mayor Mike Savage argued councillors have done well to keep the numbers as low as they have, compared to other municipalities.
“We have done very well in comparison. Some are better, some are worse. Vancouver and Victoria are looking at high increases,” Savage said.
“Municipalities are stressed. Provincial coffers are up across the board as people recover from COVID. Federally, up dramatically because of oil and gas revenues.”
Higher interest on overdue taxes could lower increase
Savage moved to potentially decrease the increase to the average tax bill by raising interest on overdue tax accounts. Staff provided an option to the committee to raise $1.3 million in 2023-2024 by raising the rate from 10% back to the pre-COVID 15%.
“When we reduced it to 10% during COVID, the interest rate, prime, was 2.5% or something like that,” Savage said.
“This is another one of those things we did during COVID to specifically assist people during a difficult time, and we’re coming out COVID. If that means $1.3 million, I don’t think that’s an unfair or undue burden.”
Renee Towns, director of revenue, told councillors a higher interest rate encourages people to pay their taxes on time and avoids a need for tax sales.
“We don’t want people to get too far behind in their taxes, so by setting an interest rate at this level we encourage payment, not necessarily to generate revenue,” Towns said.
The motion to consider that rate increase during the budget adjustment list debate, scheduled for March 29, passed unanimously.
Airport tax bill could soar, next year
It won’t do anything for the tax bill this year, but councillors will consider charging the airport more property tax.
Staff brought a budget option to the committee, titled “Terminate and Re-negotiate Taxation Agreement with Halifax International Airport Authority (HIAA).” The potential new revenue was $1 million to $2 million in 2024-2025.
HRM struck a 20-year tax agreement with HIAA in 2019. The airport pays a base amount indexed to inflation, and a per-passenger amount, 22 cents.
Although it’s a 20-year agreement, HRM can terminate it as long as it gives HIAA 365 days notice. For next year, HRM would have to give notice by the end of March. And that’s what staff proposed.
Staff argue airport gets a big discount
In 2021, according to a briefing note to councillors, HIAA paid about $1.65 million in taxes. If it was assessed and taxed normally, HRM said it would’ve paid $6.52 million — a discount of $4.87 million.
Staff argued in the briefing note that the per passenger rate “appears low” compared to the other airports.
“Council may wish to renegotiate the agreement to revise the terms to increase the per passenger rate to a higher rate and perhaps removing the base rate,” staff wrote.
Coun. Kathryn Morse argued it was the right place to raise revenue next year, and put the motion on the floor.
“I think we should be doing whatever we can to improve transportation options for the majority of the population in HRM, on public transit,” Morse said.
“And if it means taking some money away from airports, which are a smaller number of people who are often financed by their workplaces and who are perhaps better off, I think it makes sense to look at finding funds in those types of locations, those types of avenues.”
Coun. Cathy Deagle Gammon, whose district includes the airport, was opposed to terminating the contract. She argued councillors need more information about the current agreement.
“I would not feel like it would be an informed decision today,” Deagle Gammon said.
Savage and other councillors were OK with the termination and renegotiation, but not the assigning of a dollar value.
“I certainly don’t support identifying a target and then saying we’ll negotiate but we’ve already put a budget in for 24-25,” Savage said.
Morse amended the motion to remove the dollar figures, and it passed with Deagle Gammon and Coun. Trish Purdy voting no.
The matter is subject to a vote at council, tentatively scheduled for March 21, before it’s finalized and the municipality gives notice to terminate.