The City of Winnipeg’s modest surplus for 2023 is good news, especially after several years of financial hardship.
It’s also a reminder of how fragile the city’s finances are and how desperately it needs a new revenue deal from the provincial government.
City hall finished 2023 with an operating surplus of $12.3 million, after posting a sizable deficit of $144 million the previous year (owing, largely, to the lingering effects of the COVID-19 pandemic).
The 2023 numbers aren’t quite as rosy when calculating the city’s tax-supported budget — a small $300,000 deficit, which excludes revenue-generating entities such as water and waste and transit. Still, it’s a major turnaround from the financial crisis the city was in during the pandemic, as revenues plummeted and costs related to the public-health emergency soared.
However, the city’s financial status is not sustainable over the long term.
One of the major reasons the finances are back in the black is because of a 3.5 per cent property tax hike brought in by Mayor Scott Gillingham. The city’s consolidated revenues were up $159 million last year compared to 2022 (from $1.769 billion to $1.928 billion). That’s a nine per cent increase.
Of that, $47 million came from higher tax revenues, mostly from the property tax hike and a $1.50-per-foot increase on homeowners’ frontage levy.
Without the tax increase, the city would still be in the red.
Gillingham was upfront with voters about property taxes during the 2022 municipal election. He pledged to raise them by 3.5 per cent annually and he kept his word.
Promising to jack up taxes isn’t usually a winning formula for politicians. But in this case, it appears most Winnipeggers have come to accept that modest annual property tax increases are unavoidable if they want their streets fixed, their snow plowed and their libraries kept open.
Unlike senior levels of government, the city has very few growth revenues, such as income and sales taxes. It relies primarily on property taxes for its tax-supported budget, as well as transfers from the provincial and federal governments.
But because the latter comes at the whim of whoever is in office on Broadway, there’s no guarantee those transfers will rise every year. City council found that out during the former Pallister government reign (from 2016 to 2021) when transfers from the province were frozen for several consecutive years, even as costs rose dramatically during the pandemic.
Give the city credit for one thing, though: it kept costs in check last year. It’s another reason why city hall is back in the black. The city’s consolidated expenses rose by only $2 million in 2023, from $1.913 billion to $1.915 billion. That was due in part to lower snow-clearing and ice-control costs.
Even with a 3.5 per cent annual property tax increase, the city still doesn’t have the resources to provide the services most Winnipeggers likely expect from their municipal government. Winnipeg’s streets are in horrible shape; parks aren’t maintained properly; pools are closing; transit is grossly underfunded; raw sewage still spews into the river virtually every time it rains; there is a massive shortage of bike paths in the city, and the list goes on.
Anyone who has followed city finances over the years knows there’s only one way to solve that: the need for some form of growth revenues from the province. Whether that’s a share of sales taxes, or some other growth revenue, it’s the only way the city can afford to finance core municipal services over the long term — unless it substantially raises property taxes every year. The latter option would need to be far more than 3.5 per cent a year, which barely keeps the municipal government’s head above water.
The real question is: why aren’t politicians making this a priority? The subject of providing municipalities with growth revenues comes up from time to time. It’s a topic that’s often included in candidates’ platforms during elections. But it usually fizzles after the ballots are counted. Right now, a new deal for cities is barely on anybody’s radar.
That will have to change if Winnipeg wants to improve its transit system, fix its combined sewers, properly maintain its green spaces and fix its crumbling infrastructure.
It can’t do it on an annual tax increase of 3.5 per cent. The numbers just don’t add up.
tom.brodbeck@freepress.mb.ca
Tom Brodbeck
Columnist
Tom has been covering Manitoba politics since the early 1990s and joined the Winnipeg Free Press news team in 2019.
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