Budget

2022/23 Fiscal Framework

The 2022/23 Fiscal Framework was presented to the Budget Committee of Regional Council on Tuesday, Nov. 23. Read the report here.

The Framework is presented annually to Regional Council with recommendations for tax modifications to accommodate changing operational costs, capital investments, as well as debt and reserve changes including funding for current and new strategic initiatives. The framework sets the broad, opening strategy for developing the initial municipal budget.

The following motion was adopted by the Budget Committee on Friday, Nov. 26:

THAT the Budget Committee:

1.   Direct the Chief Administrative Officer to develop the 2022/23 Budget according to Council's approved priorities, and preliminary fiscal direction, including:
a)   Setting the average property tax bill for residential and commercial properties at a 2.9 per cent increase; and
b)   An additional 3.0 per cent increase in the average property tax bill for a dedicated Climate Action Tax to fund Strategic Investments; and

2. Recommend that Halifax Regional Council:
a) Approve the updated Reserve Business Cases included in Attachment A of the staff report dated November 9, 2021 and the transfers in reserve balances and commitments described in the staff report dated November 9, 2021; and

3.   Direct the Chief Administrative Officer to prepare a Supplemental Report with respect to options to reduce the final average property tax bill increase from 5.9% to 3.7% through adjusting:
a)   funding for capital projects, through changes in Capital from Operating, Debt, Reserves, Cost Sharing or other,
b)   the timing of capital projects, and,
c)   operating costs and revenues, as appropriate.

Detailed discussions, along with public input, will begin in February 2022. This will provide appropriate time for Regional Council to debate and adjust the budget over the coming months, with the final budget expected to be completed April 12, 2022.

Other information:

Municipal statement regarding the 2022/23 Fiscal Framework - Nov. 19,2021

Common Questions

What is the annual Fiscal Framework report?

The Fiscal Framework is presented annually to Regional Council with recommendations for tax modifications to accommodate changing operational costs, capital investments, as well as debt and reserve changes including funding for current and new strategic initiatives. The Framework sets the broad, opening strategy for developing the initial municipal budget.

Did the Budget Committee approve the Fiscal Framework?

As outlined in the report, the Budget Committee directed the CAO to develop the 2022/23 budget according to Council’s approved priorities, and preliminary fiscal direct. This includes setting the average property tax bill for residential and commercial properties at a 2.9 per cent increase and implementing an additional 3.0 per cent increase in the average property tax bill for a dedicated Climate Action tax. If approved in the Budget, the average property tax bill would increase by a total of 5.9 per cent.

The Budget Committee also directed the CAO to prepare a supplemental report, exploring options to reduce the final average property tax bill increase from 5.9 per cent to 3.7 per cent. This would be accomplished by adjusting funding and timing for capital projects, as well as operating costs and revenues (as appropriate).

Will there be an opportunity for residents to provide input before the budget is finalized?

Detailed discussions, along with public input, will begin in February 2022. This will provide appropriate time for Regional Council to debate and adjust the budget over the coming months, with the final budget expected to be completed April 12, 2022.

What is the proposed Climate Action Tax?

Significant funding is required for key climate action initiatives to progress. This year’s Fiscal Framework proposes the establishment of a Climate Action Tax which will directly support HalifACT and the Integrated Mobility Plan, which includes projects such as electric vehicles, net-zero buildings and multi-modal transit corridors. Pending approval by Council, is anticipated that the Climate Action Tax would remain in place for at least the next 10 years, with the associated rate determined annually.

How was the 2020/21 budget impacted by COVID-19?

In March of 2020, Regional Council had completed, but not ratified, the 2020/21 budget when the COVID-19 pandemic struck. As a result, Regional Council completely revised that year’s budget, referred to as the recast budget. In 2021/22, the approved budget plotted a path through the pandemic, assuming that the pandemic would last a total of eighteen months from start to finish. While services started to be re-introduced, fees and revenues remained subdued, especially transit fares. The federal government’s Safe Restart program provided $31 million of cost-sharing to offset the decline of revenues. During this time period Deed Transfer Taxes (although expected to decline) remained quite robust. In 2021/22 Regional Council set the average tax increase at 0.9 per cent.

During the pandemic, Regional Council approved the Fiscal Sustainability Strategy which examined the current financial state of the municipality in (1) Operating and Taxes, (2) Capital, (3) Reserves, (4) Debt. This included recommendations to develop Strategic Initiative reserves for projects that are tied to an approved Council strategy and are significant enough to lead to a discernable increase in the tax rate or special funding that is outside the normal budget process. This should include any required changes to debt and reserve policies and should be eligible to be funded through dedicated tax levies.

Why is the average property tax potentially increasing by 5.9 per cent, compared to 0.9 per cent last year?

Inflationary pressures on the 2022/23 budget have been considerable. There are several major cost increases expected in a variety of areas, including a rise in fuel costs by 40 per cent, an estimated $2.9 million resulting from the RCMP collective agreement, as well as $4 million in contractual increases across the organization.

Additionally, in the summer of 2022, the municipality will be assuming responsibility for 300 lane-km of provincial roads. This will lead to operating pressures of $4 million in 2022/23 as well as a $6 million pressure on the capital budget. In fact, the municipality is adding $13.4 million to its capital budget to address this and other pressures, and to increase services related to roads, parks and recreation.

Significant funding is also required for key climate action initiatives associated with HalifACT and the Integrated Mobility Plan to progress. This includes projects such as electric vehicles, net-zero buildings and multi-modal transit corridors.

Should residents expect a similar proposed increase in the average property tax in future years?

Historically, the municipality’s property taxes have been less than inflation and lower than other cities of similar size. To fund the continued growth of Halifax, manage municipal assets and annual budget pressures, as well as meet our climate change initiatives, the municipality will need to develop and implement a sustainable tax policy that accounts for inflation, annually, and supplements revenue through additional sources (e.g. user fees, cost sharing, etc.). Per our Fiscal Sustainability Strategy, we’re currently developing guiding principles that will help to identify future revenue streams through options such as user fees and cost sharing.

While the Fiscal Framework proposes that the average property tax bill would increase by a total of 5.9 per cent in 2022/23, a sustainable tax policy approach would target relatively smaller increases in future years. Staff will also be preparing a supplemental report with respect to options to reduce the final average property tax bill increase from 5.9 per cent to 3.7 per cent.

What can residents expect in terms of a tax adjustment?

The final Budget will outline tax adjustments. Residents can expect an increase in the average property tax bill for residential and commercial properties by 2.9 per cent. Additionally, a 3.0 per cent increase is being recommended as part of a new dedicated Climate Action Tax. If approved, the average property tax bill would increase by a total of 5.9 per cent. Staff will also be preparing a supplemental report with respect to options to reduce the final average property tax bill increase from 5.9 per cent to 3.7 per cent.

When considering the average residential property tax bill (home assessment of $262,700), initial calculations indicate that the impact of the 2.9 per cent increase would be $58, and the 3.0 per cent Climate Action Tax would be $63, for a total of $121 annually. For the average business (commercial assessment of $1,456,300), the impact of the 2.9 percent increase would be $1,258 and the Climate Action Tax would be $1,296, for a total of $2,554 annually.

What are some anticipated pressures on the budget this year?

Inflationary pressures on the 2022/23 budget have been considerable and there are several major cost increases expected in a variety of areas, including a rise in fuel costs by 40 per cent, an estimated $2.9 million resulting from the RCMP collective agreement, as well as $4 million in contractual increases across the organization.

Additionally, in the summer of 2022, the municipality will be assuming responsibility for 300 lane-km of provincial roads. This will lead to operating pressures of $4 million in 2022/23 as well as a $6 million pressure on the capital budget. In fact, the municipality is adding $13.4 million to its capital budget to address this and other pressures, and to increase services related to roads, parks and recreation.

Significant funding is also required for key climate action initiatives associated with HalifACT and the Integrated Mobility Plan to progress. This includes projects such as electric vehicles, net-zero buildings and multi-modal transit corridors.

Where can I find the 2022-23 Fiscal Framework report?

Read the municipality's statement on the 2022/23 Fiscal Framework here. The report can be found here.

Past Budgets and Business Plans

Learn more about how the municipal budget process works – as well as three tax rate options for 2021/22 presented to Council for consideration. View the presentation deck or watch the presentation, provided to the Budget Committee on Feb. 5, 2021 by Chief Administrative Officer Jacques Dubé and Chief Financial Officer Jane Fraser.