The City of Winnipeg’s inability to impose a planned 911 upgrade fee on telephone bills is a perfect example of why city hall needs more taxation authority from the provincial government.
The city’s 2024 budget proposed charging $1 per month on all cellphones and land lines that have a Winnipeg address, as of this year. Revenue from the charge was to be used to finance the “next generation” 911 service that would allow users to submit texts, videos and photos.
Trouble is, the city is severely limited in what types of fees and taxes it can charge under the City of Winnipeg Charter. The provincial legislation specifies what the city can and can’t do, on everything from the composition of city council to how photo enforcement can be used.
WAYNE GLOWACKI / FREE PRESS FILES
The City of Winnipeg’s inability to impose a planned 911 upgrade fee on telephone bills is a perfect example of why city hall needs more taxation authority from the provincial government.
The act has 135 pages that detail the categories of taxes and fees that can be imposed; it’s very prescriptive.
Even the rate is specified in some cases, such as the 2.5 per cent city tax on domestic electricity bills. If the city wanted to increase that, or the tax on natural gas, it would have to go cap in hand to the province and request a legislative change. That means a bill would have to be introduced by the government and passed by the legislative assembly. It’s fairly onerous.
So when the city proposes something like a new fee on phone bills, it has to get provincial approval, which it still doesn’t have. The Kinew government has not said whether it will allow it.
City officials say they didn’t know they needed provincial approval for the 911 fee (which is shocking), so it won’t be imposed this year. Maybe next year, or maybe not at all if the provincial government doesn’t give it the green light. The province has rejected proposed city taxes and fees in the past.
That doesn’t give the city many options beyond raising property taxes to pay for the growing cost of city operations. There is a long list of regulatory and other fees that can be increased, but in terms of new ones, including growth taxes such as a sales tax (which is what the city really needs), city hall is at the mercy of the province.
Sales taxes are viewed as more equitable because they’re applied more broadly and are usually related to income (meaning the more money a person earns, the more they usually spend and the more sales tax they pay).
Either way, the status quo will have to change soon or the city will have little choice but to jack up property taxes beyond the 3.5 per cent annual increases planned for the next three years.
Why? Because the city is expected to drain its financial stabilization fund as early as this year and will no longer have that cushion to rely on to balance the books.
City council is supposed to ensure the fund has a balance equal to six per cent of the tax-supported budget (currently $81.3 million). If it falls below that, it’s required to have a plan to replenish the fund. Right now, there is no plan because the city has a structural deficit, meaning it doesn’t have the revenue to pay for growing city costs.
The city has reported year-end deficits in four of the last five years and has relied on the rainy day fund to balance the tax-supported budget, which it’s required to do by law.
The city’s second-quarter financial report released this week says city hall is forecasting a deficit of $19.2 million this year. It’s an improvement over the first-quarter forecast of $39.3 million, but mostly because the city has decided not to transfer money back into the financial stabilization fund this year. It can’t afford to. It’s broke.
What about savings? Surely there’s fat at city hall that can be trimmed. There is, but there’s far less of it than there used to be. The 2024 budget identified $24 million in efficiency savings that could be found. About $10 million of that has so far been realized through various departments. That will only get the city so far. It needs new revenue streams, preferably ones that grow with the economy.
There have been some high-level talks between the city and the province about what those new revenue streams might look like, but nothing is finalized. As it stands, the city can’t even get a small 911 fee approved.
The problem is the province is rarely willing to take the political heat for approving a new city tax, which is why (under various governments) it has kiboshed proposed fees and taxes in the past. The province would rather put that political burden on city council, which has few options beyond raising property taxes.
Higher property taxes will likely be the order of the day if city hall doesn’t get new revenue sources soon. The well is almost dry.
tom.brodbeck@freepress.mb.ca
Tom Brodbeck
Columnist
Tom Brodbeck is a columnist with the Free Press and has over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.
Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are posted online or published in print – part of the Free Press’s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.
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