Where's the line? Council walking tight rope between taxes, services

What is the true cost of zero?

How does no increase in property taxes for the city’s operating portion of the 2025 budget affect services in Barrie?

On more than 60 city services such as firefighting, snow clearing, road repairs, garbage pickup, transit, parks and recreation, and water treatment?

Coun. Ann-Marie Kungl posed the question at a recent finance and good governance committee meeting, talks that will continue Wednesday evening as councillors debate the 2025 operating and capital budgets.

“Zero might make sense … but what’s the breaking point?” asked the Ward 3 councillor on Nov. 27. “Is it this year, is it next year, is it further down the line? What’s the impact to (service) operations, specifically when we hold the line, and is there a tipping point when we talk about continuing to ask our public servants to do more with less and still meet standards and expectations?

“I can’t help but think how do we answer the question to the public, which is it sounds great, and the majority of the people say thank you for holding the line at zero, others … say is this a good idea? I’m trying not to be naive to think this won’t come at a cost some point down the line," Kungl added. 

Coun. Bryn Hamilton said she shared Kungl’s concerns with council's goal of no increase to the operating cost of city services next year.

“I do sometimes worry there’s such pressure to maintain the line on zero per cent that services … it starts to affect services,” Hamilton said, mentioning yard waste pickup and transit routes. “Services, at the end of the day, are what matter most to people. Our services keep taking hits because we’re really trying to hold the line and that’s being felt by our residents.”

The 2025 tax-supported base budget for city operations and the infrastructure investment fund has gross expenditures of $342.6 million and a net property tax levy requirement of $197.8 million.

And it is offering more to homeowners whose typical Barrie home in 2025 has an assessed value of $369,000, and its property taxes before any increases next year are $4,994.

“In order to maintain the service levels that we’ve always had, we’re going to spend, this year, another $7.2 million. So it’s not like we’re not spending money,” said Coun. Clare Riepma. “Then in addition to that for new service levels, we’re spending another additional $700,000. That all works out to zero when you take improvements in our debt management into account and the assessment growth (forecast at $6 million next year).”

“What is the appropriate amount of new revenue that the city needs in order to sustain services,” said Mayor Alex Nuttall, mentioning that the sale of three city-owned properties for residential development — H-block near the downtown Barrie Public Library, the old police station on Sperling Drive and land on Dean Avenue, near the Painswick library branch — would help the city’s tax rate stabilization reserve, which can lighten the tax load on homeowners.

The city also plans to hire 13 full-time equivalency employees next year to help deliver services. 

“I don’t know if the term holding the line is necessarily accurate,” said Coun. Gary Harvey, finance and good governance committee chairman. “We might be holding the line when it comes to a zero per cent increase, but when it comes to what is actually contained in there from an operational standpoint there are many staff positions.”

But Coun. Amy Courser asked if the 2025 budget is going to impact service levels.

Michael Prowse, Barrie’s chief administrative officer, said the answer is yes and no.

“The reality is this budget will increase service levels,” he said. “This budget includes more money, more services, but at the same time the City of Barrie is facing some pretty stiff headwinds.”

That could include almost-certain increases for the services provided by the County of Simcoe (social housing, ambulances, Ontario Works, etc.) and police spending, which means Barrie homeowners are likely facing an overall 2025 hike when the tax bill comes.

At this point, the 2025 police budget is $71.43 million — which is $3.9 million or 5.79 per cent more than this year. The police budget is traditionally about 20 per cent of Barrie’s operating budget, and the largest portion.

Factors also include the city’s infrastructure investment levy, or capital rehabilitation tax, that’s set to increase by two per cent next year, and water and sewer charges in 2025 are to increase 3.96 per cent and 4.92 per cent, respectively, adding almost $145 in total to the typical homeowner’s bill.

Craig Gillespie, the city’s senior manager of corporate finance and investment, said reserves can help the city walk the fine line of property taxes and service levels, which are set by the annual operating/capital budgets.

“The reserves have to be looked at in their totality,” he said. “Reserves are probably the most important part of your financial sustainability.” 

Gillespie said there are three or four city reserves which need attention — mentioning fleet reserve, the county's reinvestment reserve and the tax stabilization reserve.

Barrie’s reserve balance in 2025 is forecast at $251 million, and the increase in city reserves during the next five years is expected to be $122 million.

The city’s current debt level is $271 million, forecast to drop to $254 million in five years.

The schedule calls for the city’s portion of spending to be debated by general committee Wednesday evening, then passed by city council Dec. 11.

Councillors will receive 2025 budgets from city service partners — the county, police department and the Barrie Public Library — on Jan. 8, then hear presentations of these budgets Jan. 15. 

General committee’s budget talks will be Jan. 22, city council approval of the full operating and capital budgets on Jan. 29.