Budget Highlights Include Lower Mil Rates

The City of St. John’s brought down its budget for the 2013 fiscal year on Dec. 10 and it reaffirms the City’s commitment to fiscal discipline and prudent expenditure management.

“The budget process for this year was challenging,” says Councillor Danny Breen, Chair of the Finance and Administration Standing Committee. “Not only are we in the first year of a new assessment cycle which saw property values increase significantly throughout the City, we are also moving forward with blending the Business Occupancy Tax into the Business Realty Tax and we have moved to a three-year budget process. The City is also facing some financial challenges which must be dealt with, but overall I am very pleased with the 2013 Budget we have developed for our City.”

The City worked diligently this year to ensure that expenditure growth was kept to a minimum and overall the City’s budget has grown by a prudent 3.8 per cent to approximately $244.6 million. Last year’s expenditure growth was approximately 4.2 per cent.

“We have made great strides in recent years in ensuring each of our departments is doing everything they can to manage expenses and it is always challenging to balance the need to provide first class services to residents, while ensuring we keep the tax burden as low as possible,” says Councillor Breen. “I am very pleased to see the City keep its expenditures to such a low level for the 2013 fiscal year.”

The revenue highlights for 2013 include:

• A decrease in the Residential Property Tax mil rate to 8.1 mils. The mil rate was previously set at 10.6 mils.
• A decrease in the Business Property Tax mil from an effective level of 31.4 mils to 26.2 mils.
• No increase in Water Tax for residential properties.
• The Commercial Water Tax rate will be increased from $0.88 per cubic meter to $1.32 per cubic meter. The Commercial Meter rates will be reduced by 20 per cent. The net effect will be a 27 per cent increase in the Water Tax revenue collected from the commercial sector. This will begin to address the inequity in the Water Tax system which currently sees residential properties paying a disproportionate share.
• The City has asked the provincial government to approve an increase in the Accommodation Tax from 3 to 4 per cent to support the marketing initiatives of Destination St. John’s and the expansion of the St. John’s Convention Centre.
• There will be several fee increases, as the City adjusts fee levels to be more reflective of the cost of providing services. As an example, the Development Fee will increase from $1,000 per residential lot to $2,000. This fee will also be applicable to commercial developments. The current $1,000 fee has been in effect since 2004. Development Fee revenue is 100 per cent dedicated towards growing and maintaining our network of parks, open spaces and playgrounds. Additional fee revenue of approximately $800,000 is expected from these fee increases.
• The City anticipates the Municipal Operating Grant (MOG) from the Province will remain the same as received in 2012 at $3.4 million.

“It remains very challenging to finance the City based on a system that is so dependent upon property and water tax, with these taxes making up 85 per cent of our revenue base,” says Councillor Breen. “While we are currently forecasting mil rate increases for 2014 and 2015, we remain hopeful that the province will respond to the proposal we put forth in 2011 for a new fiscal relationship. The province has said it is reviewing the municipal operating grant formula, but this does not go far enough to address the significant issues facing the City and other municipalities across our province.”

City of St. John's Budget Speech

Backgrounder: Relationship Between Property Values and Mil Rates

For further information:
Jennifer Mills
Communications Officer
City of St. John’s
Phone: (709) 570-2037
Cell: (709) 690-7586
E-mail: jmills@stjohns.ca

Danny Breen
Ward 1 Councillor
Chair, Finance and Administration Standing Committee
City of St. John’s
Phone: (709) 576-2332
Cell: (709) 687-9513
E-mail: dbreen@stjohns.ca