Maintaining services, responding to pandemic pressures: Council Committee to consider 2022-2023 indicative rates

The City of Saskatoon is preparing its first multi-year budget during a global pandemic. Despite the uncertainty as to when restrictions are lifted and people respond to a post-pandemic environment, the City Administration is recommending that the Governance and Priorities Committee (GPC) of City Council set the 2022 and 2023 indicative rates at their next meeting, Monday, June 21. Setting the indicative rate guides the Administration in preparing the budget by allocating resources to the services, programs and initiatives that help achieve Council’s strategic priorities.  

Driven by growth and inflationary pressures, the Administration is estimating an indicative rate for each of the next two years that covers the increasing costs of service delivery. To that end, the Administration is proposing annual average operating expenditure increases of three percent, the lowest in several years.

“The City’s expenditure increases are driven primarily by growth, and inflation,” says Tarasoff. “Administration has made efforts to limit the increase in budgetary expenditures with the aim to lessen the potential property tax increase while maintaining existing service delivery levels.

“Through the Administrative budgeting process, the Administration already cut $7.5 million from the initial indicative budget for 2022. These adjustments reduced the potential indicative property tax rate by approximately three percentage points.”

Addressing inflationary and growth pressures while delivering existing services and maintaining service levels has proven to be challenging for the Administration as non-tax revenues fail to keep pace.

Although the Administration estimates revenue increases of $3.15 million in 2022 and $5.06 million in 2023, for the indicative rate, these increases are well below what the City would need in order to keep pace with changes in the economy.

Growth in user fees and government operating transfers are below population changes and inflation. This revenue gap causes significant pressure on our starting point, the indicative rate. 

“Preparing the 2022-2023 indicative rates produced many challenges. This is because there are many financial pressures from declining non-tax revenues and longer-term challenges to increase that revenue due largely to the impacts of COVID-19,” says Kerry Tarasoff, Chief Financial Officer. “The tough job is to strike the right balance between delivering on City Council priorities, service levels, budget realities and the long-term financial stability for the City.”

The Administration will require the Committee’s direction on setting a property tax target for preparing the 2022-2023 budget for deliberation later this fall. The options are:

• to set the property tax rate equal to the indicative rate;
• add to the property tax rate above the indicative rate, which provides the ability to consider implementation of some of the budget options that will be presented in August; or
• decrease the property tax rate below the indicative rate, which would require reductions to the budget that could change existing service levels. 

The estimated indicative rate increase is 5.96% in 2022 and 5.42% in 2023. These indicative rates do not include the expected short-term impacts from COVID-19. 

The City estimates the fiscal impact from the COVID-19 pandemic to be $16.8 million in 2022 and $10 million in 2023. To address this impact, the City will require spending restrictions and a fiscal transfer from either the federal or provincial government (or a combination of both) like the Safe Restart Program funding that was provided in 2021.

Setting the indicative municipal property tax rate is an important first building block in the development of the City’s multi-year business plan and budget. It is important to remember this first step is not the final property tax rate. City Council will finalize its decisions at the 2022-2023 budget deliberations set for November 2021.

Visit saskatoon.ca/budget for the Administrative Report to GPC andmore information on the City's 2022  2023 Multi-Year Business Plan and Budget process.