Chamber scolds city council over tax hikes
Councillors reluctant to commit to zero per cent tax increase despite being warned that city could end up in 'death spiral' if costs keep rising
Cody Punter
Northern News Services
Published Wednesday, May 28, 2014
SOMBA K'E/YELLOWKNIFE
The executive director of the NWT Chamber of Commerce issued a stern rebuke to city council over its spending habits at a committee meeting Monday afternoon.
During a presentation to council regarding the proposed 2015 budget, Mike Bradshaw, the chamber's executive director, warned that the city could find itself in a "death spiral" if council does not take action to cut taxes in coming years.
Speaking on behalf of the chamber's membership, Bradshaw told council that companies representing a few hundred employees have "just about reached the end of their patience with regards to the high cost of operating their businesses in the Northwest Territories and specifically here in Yellowknife."
He also pointed out that the cost of living has skyrocketed for residents over the last nine years despite the fact that the city's population has only grown by two per cent.
| City could end up in 'death spiral' if costs keep rising |
As a result, he said some businesses are considering relocating to more affordable jurisdictions if action is not taken to reverse a decade-long increase in industrial and commercial tax revenue that has seen it grow by 88 per cent to $9.1 million in 2012.
If businesses and residents start leaving Yellowknife, this could result in a "death spiral" where the city would have to slash spending and services at an extreme rate to avoid a larger exodus, Bradshaw warned.
"That sounds like a dramatic term, but that's exactly what happens," he said.
Getting taxes to an acceptable level was council's responsibility, yet there are no firm targets for administration to shoot for when formulating the budget, said Bradshaw.
"The overarching concern with the way the budget is set here is that there is not enough direction from council," he said before describing council's lack of direction as "backwards."
"In business, you set your target as a performance metric based on whether your costs are going to increase over a given period then you set a budget that enables you to meet that target. I think the process is inverse here," he said.
When asked by councillors what a reasonable target would be, Bradshaw said they should aim for a zero per cent tax increase over the next few years.
"We need to throw on the hand brake and turn the corner," he said.
City councillor Dan Wong said the city faces inflationary pressures, which are calculated by the municipal price index and are expected to jump up to three per cent this year - up from 2.66 per cent the year before.
Bradshaw dismissed the city's dependence on inflation to calculate tax increases and said it needed to start thinking like a business rather than a government.
"The business community deals with inflation in its operations and finds ways to perform to targets regardless of that condition and governments don't. They simply accept it ... as a cost input," he said.
Couns. Rebecca Alty and Niels Konge both said they would "strive for zero per cent" tax increases.
"From a young age, we're taught money doesn't grow on trees and as a government, I think we do need to adopt that mentality," said Alty, who proposed cutting $1.5 million from the budget.
However, there was otherwise little appetite for council to set fixed targets for administration as Bradshaw proposed, with most agreeing that the city should stick to its model of going through the budget line by line to whittle it down.
"I'm not going to take a hard line on zero, but I think we can do more by shifting around dollars that we already spend," said Coun. Adrian Bell.
The public is encouraged to offer its input on the budget over the summer. Council is next scheduled to discuss the budget on October 14.
