St. John’s eyes 2017 tax decrease

Published on March 7, 2016
Coun. Jonathan Galgay, shown in a recent photo, says the city acknowledges people are not happy with the budge, and council hopes to reduce taxes in future.
Telegram file photo

Lower taxes, less spending — that’s the plan St. John’s city council adopted Monday evening, as the city promises more transparency on its purse strings in response to sustained criticism since it passed the 2016 budget in December.

“We’ve certainly heard from residential property owners, we’ve heard from the business community,” said Coun. Jonathan Galgay, chairman of the city’s finance committee, after city council’s weekly public meeting. “People were not happy with the budget that was presented last year, no doubt about it. One of the things that we’ve been able to do is come up with some objectives in terms of where we want to go as a council and how we’re going to get there.”

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Those objectives include:

• Reducing the residential mill rate (currently 7.8 mills) between 0.3 and 0.5 mills, which would mean a tax decrease of between 3.8 and 6.4 per cent. A similar reduction in the commercial tax rate (25.2 mills) would see a drop of between one and 1.5 mills. Cutting the rate in those ranges would require cutting spending by between $6.6 million and $11 million;

• No spending increases. Funding for a spending increase must be found within the existing budget;

• Maintaining staffing at 2016 levels or lower;

• Increasing capital out of revenue funding available by 10-20 per cent, equating to between $2.7 million and $5.3 million;

• Immediately implementing improvements found during the program review already underway.

Galgay said the 0.3-0.5 rate-reduction range reflects a realistic goal for the city.

“Council ultimately wants to get that down as low as we can, and if we can find more efficiencies, perhaps the number can go much lower in terms of the reduction of the mill rate,” he said. “But we have targets. We have given staff their marching orders. They have undertaken this, effective immediately, and we anticipate that we should be able to reach these targets.”

Nancy Healey, CEO of the St. John’s Board of Trade — in attendance with several other representatives of the city’s business community to present a petition calling for immediate tax relief — called the plan “a start.”

“We’re getting some acknowledgement from council of the challenging budget that they brought down, and the egregious tax increases they had, so there’s recognition there, so we appreciate that,” she said.

Healey said the business community was hoping for a mill rate reduction sooner than 2017 — and the plan approved by council Monday doesn’t commit the city to one then — but Galgay and city staff note provincial legislation prevents council from changing the 2016 mill rate now.

“The talk of maybe a mill rate reduction by 2017, I hope some of my members are going to make it to 2017, so that would be a concern,” she said. “We still haven’t heard anything on the vacancy tax.”

Twitter: @DanMacEachern