Budget Direction

2023/24 Budget Direction

The Budget Direction, formerly known as the Fiscal Framework, is presented annually to Regional Council with recommendations for tax and non-tax revenues to accommodate changing operational costs, capital investments, as well as debt and reserve changes. It is also reflective of on-going and emerging opportunities and challenges.

The Budget Direction sets the underlying assumptions that each business unit will build their proposed operating and capital budget on. 

When was the 2023/24 Budget Direction report presented to Budget Committee?

The 2023/24 Budget Direction report was presented to Budget Committee on Friday, November 25, 2022. There were two separate motions passed, as follows: 

MOTION 1:

THAT Budget Committee: 

1.    Direct the Chief Administrative Officer to develop the 2023/24 Budget according to Council's approved priorities, and preliminary fiscal direction, including setting the average property tax bill for residential and commercial properties at an 4.0 percent increase by preparing proposals for reductions to the operating budget and only use onetime expense to offset costs in the current fiscal year if matched with an operating budget reduction in subsequent years. 

2.    Recommend that Regional Council rescind the direction from the 2022-23 fiscal budget to include $7 million in the 2023/24 budget to fund a sidewalk program from capital from operating; and 

3.    Further recommend that Halifax Regional Council: 

•    Reallocate $20 million included in the Strategic Initiative Operating Reserve (Q667) in 2019 as a potential capital contribution for the construction of a Community Stadium, to the following reserves: 
o    Transfer $5 million to the Options Reserve (Q421) for the Solid Waste Facility capital project (CW190003); 
o    Transfer $15 million to the Capital Fund Reserve (Q521) to fund over-commitments within the capital fund reserve; and 

•    Approve revised debt policy of $1,500 per dwellings and amend capital-from-operating to be $64.922 million, by reducing $8 million from street recapitalization, for the 2023/24 budget.

MOTION 2: 

THAT Budget Committee direct the Chief Administrative Office to request a staff report to include $3 million in the 2023/24 budget to fund a sidewalk program from debt.

Recommendations 2 and 3 of the first motion passed are targeting ratification at Regional Council on December 13, 2022. 

When was the 2023/24 Budget Direction report presented to Regional Council?

The 2023/24 Budget Direction report was presented to Regional Council on Friday, November 25, 2022. 

What is the annual Budget Direction report (formerly known as Fiscal Framework)?

The Budget Direction, formerly known as the Fiscal Framework, is presented annually to Regional Council with recommendations for tax and non-tax revenues to accommodate changing operational costs, capital investments, as well as debt and reserve changes. It is also reflective of on-going and emerging opportunities and challenges.

The Budget Direction sets the underlying assumptions that each business unit will build their proposed operating and capital budget on. 

Following Regional Council’s approval of the Budget Direction, each business unit will present their proposed budget to the Budget Committee. The Budget & Business Planning Schedule is outlined in Option 1 of the Strategic Multi-Year Business Planning and Budget Process and 2023/24 Budget Outlook. It is important to note that this schedule may be adjusted following direction from Regional Council at any stage of the budget process.

The Budget Committee can make changes to the budgets via the Budget Adjustment List, which will either lower or increase the overall tax increase for 2023/24.

Did the Budget Committee accept the 2023/24 Budget Direction report on November 25, 2022?

As outlined in the November 25, 2022, 2023/24 Budget Direction report, the Budget Committee directed the Chief Administrative Officer (CAO) to develop the 2023/24 Budget according to Regional Council's approved priorities, and preliminary fiscal direction. 

This includes a 4.0 per cent increase to the average residential and commercial property tax bill, by preparing proposals for reductions to the operating budget and only use one-time expenses to offset costs in the current fiscal year if matched with an operating budget reduction in subsequent years.

Additionally, the CAO has been directed to: 

  • rescind the direction from the 2022/23 fiscal Budget to include $7 million in the 2023/24 Budget to fund a sidewalk program from capital from operating (meaning funding of capital projects from taxes);
  • reallocate $20 million included in the Strategic Initiative Operating Reserve in 2019 as a potential capital contribution for the construction of a community stadium, to the following reserves:
    • transfer $5 million to the Options Reserve for the Solid Waste Facility capital project;
    • transfer $15 million to the Capital Fund Reserve to fund overcommitments within the capital fund reserve; and,
  • approve a revised debt policy of $1,500 per dwellings and amend capital from operating to be $72.922 million for the 2023/24 Budget.
Does this mean that the average residential and commercial property tax bills will increase by 4.0 per cent?

The approved 2023/24 Budget Direction report includes a 4.0 per cent increase to the average residential and commercial property tax bill.

It is important to note that the property tax bill is not the tax rate. 

The 2023/24 tax rates for commercial and residential properties can only be determined once property assessment values are provided by the Property Valuation Services Corporation. These assessments will inform the tax rate required to achieve a 4.0 per cent increase in the tax bill.

The municipality is currently facing many pressures that have been unprecedented in recent history. 

As directed by the CAO, business units have spent several months scrutinizing their budgets. Through that exercise, the municipality has identified $20 million in savings through a number of efforts which include, but are not limited to, asking business units to find a collective $7 million in cuts and removing the proposed sidewalk funding increase. 

Prior to this extensive budget trimming effort, the municipality was faced with a revenue deficit that would have required an over 11 per cent increase to the tax bill. It was only through this $20 million in savings that the municipality arrived at the staff proposed 8.0 per cent increase. 

On November 25, 2022, Budget committee requested that staff come back in January 2023 with proposals on how the municipality can proceed with a 4.0 per cent increase to the average tax bill.

To address this, the 2023/24 Budget Direction report recommends the following three actions: 

  1. Average tax bill increases: The majority – over 80 per cent – of the municipality’s revenue is generated through taxes. Without increasing the tax bill, the municipality would need to draw on its already committed reserve funds, reduce capital from operating funding, or reduce services. Neither of these options is advisable. As discussed in past years, drawing from the reserve would undermine the municipality’s ability to deliver on both previously approved, and yet-to-be identified, Strategic Initiatives. 
  2. Return to fiscal sustainability: Expenditure growth has outpaced tax revenues, therefore, a tax increase is needed to sustain the municipality’s current operations. The use of one-time funding has not been recommended, at it would increase financial pressures into 2024/25. 
  3. Maintain funding for existing Strategic Initiative projects: The funding plan set for Strategic Initiatives and climate projects that was set in the 2022/23 Budget continues, and funding for the respective reserves for Strategic Initiatives remains unchanged in 2023/24. 
What mitigation efforts have been taken by the municipality?

The mitigation efforts employed during 2022/23 are now depleted, and the municipality is faced with balancing increasing cost of services with households already coping with inflation.

As directed by the CAO, business units have spent several months scrutinizing their budgets. Through that exercise, the municipality has identified $20 million in savings through a number of efforts which include, but are not limited to, asking business units to find a collective $7 million in cuts and removing the proposed sidewalk funding increase.

Staff will now take the direction provided by Budget Committee on November 25, 2022, to find further reductions in the operating budget. Staff will return in January 2023 with proposals on how the municipality can proceed with a 4.0 per cent increase to the average tax bill.

What is the Climate Action Tax?

As outlined in the approved 2022/23 Budget, the Climate Action Tax is to implement the Strategic Initiatives of HalifACT. The tax will also be used to leverage climate action funding from the private sector, federal and provincial governments, providing the necessary investment for the success of HalifACT in the years to come.

Funds from the Climate Action Tax will directly support HalifACT, which includes projects such as electric vehicles and buses, net-zero buildings and projects to improve the resiliency of communities and infrastructure. 

It is anticipated that the Climate Action Tax will remain in place for at least the next 10 years, with the associated rate determined annually. For the 2023/24 Budget and onward, the Climate Action Tax is a part of the base budget and does not factor into the tax increase required to balance the budget.

For more information about the Climate Action Tax, visit: halifax.ca/halifact and see these common questions.

What can residents expect in terms of a tax adjustment for 2023/24?

Staff are reviewing the direction provided by Budget Committee on November 25, 2022, and will return in January 2023 with the implications of a 4.0 per cent tax increase.

Where can I find the 2023/24 Budget Direction report?

The approved 2023/24 Budget Direction report, presented to Budget Committee on November 25, 2022, can be found here

What are some anticipated pressures on this year’s 2023/24 Budget?

The 2023/24 Budget Direction report was designed in the face of significant inflationary pressures, some of which include:

  • Population growth – The municipality’s population is expected to reach half a million residents before the end of the decade. This growth brings tremendous opportunities for the region, as well as new homes that require municipal services. There is also an expectation of a higher level of servicing across the entire municipality. 
  • Deed Transfer Tax revenue decreases – Recently, the municipality has been relying on the revenue from Deed Transfer Tax to mitigate otherwise larger tax increases. Over the last few years, Deed Transfer Tax has represented a greater proportion of the municipality’s tax revenue than has been seen since amalgamation. Compared to five or six years ago, Deed Transfer Tax doubled as a percentage of the municipality’s tax revenue. In 2022/23, it represented 12.8 per cent of total tax revenue. However, the Bank of Canada has increased interest rates to counter inflation, resulting in a cooling housing market which has had a negative effect on Deed Transfer Tax revenues. For the first time in five years, it is expected to decrease and continue to decline. The municipality can no longer continue to rely on this variable source of revenue to offset otherwise necessary increases to property tax.
  • Operating pressures increasing – Inflation is causing all expenditure categories to increase. Together, with the impact on wage demands and the labour shortages, hiring the people that the municipality needs to deliver services remains challenging. Simultaneously, the cost of fuel, goods and services have all risen dramatically.
  • Available reserves balance nearing capacity – While reserve balances remain strong, most are committed to current or future Capital or municipal Strategic Initiative (SI) projects, and little funding capacity remains to respond to unexpected issues or opportunities. 
  • Strategic Initiatives and climate action – Significant strategic city building programs, such as HalifACT and the Integrated Mobility Plan (IMP) are not fully funded within existing capital budget levels. In the 2022/23 Budget, there were actions taken to begin funding these initiatives. The Strategic Capital reserve was created to accumulate the funds that will be used to pay the principal and interest on the debt that will be issued to fund these Strategic Initiatives. Additionally, the Climate Action Tax (CAT) was passed with the goal of funding the first four years of HalifACT projects. Increasing project costs, as well as increasing debt borrowing costs will require future tax increases to complete these Strategic Initiatives. This is why staff are recommending maintaining current levels of funding to the SI projects.
  • Debt is a limited tool – Unlike other levels of government, the municipality is legislatively bound to approve a balanced budget and is not able to use debt to fund its on-going operations. Decreasing capital from operating – meaning funding of capital projects from taxes – will only result in projects being cancelled or delayed, primarily projects focused on maintaining existing assets in a state of good repair. 

As a result, the 2023/24 Budget Direction report was designed to address three key areas:

  • coping with expenditure growth;
  • maintaining a path toward fiscally sustainability; and,
  • maintaining funding for Strategic Initiatives and base capital funding.
     
What are the Capital Budget challenges for 2023/24?

Similar to previous budgets, the Capital Budget is facing several challenges: 

  • Rapid population growth and demands for additional services are adding pressure to this imbalance. This growth brings tremendous opportunities for the Halifax region, as well as new homes that require municipal services. There is also an expectation of a higher level of servicing across the entire municipality, including investments in rapid transit, inclusive growth and complete streets;
  • The portion of the capital budget funded directly from municipal revenues, capital from operating (meaning funding of capital projects from taxes), is not keeping pace with needs; and,
  • Delays and gaps in the industries’ supply chain, as well as the labour market, have caused extensions to project delivery timelines and increased vendor costs; sometimes costs are doubling their original estimated costs. This is putting pressure on the municipality’s reserve balances and further deferring necessary maintenance activities.

To accommodate the capital plan, the 2023/24 Budget Direction report recommends that the debt ceiling be increased from $1,200 per dwellings to $1,500 per dwellings over four years. This would allow for an increase of $62 million of debt to fund capital projects. 

How would the proposed tax increase for 2023/24 impact future Budget considerations?

For several years, the administration has been recommending longer term sustainability – through proposed tax modifications – which will safeguard the municipality’s ongoing expenditures against external factors, such as inflation. 

Was the community engaged on the 2023/24 Budget process?

Yes. The 2022 Municipal Services Survey was conducted between September 12 and September 29, 2022. The survey was available both online and in a paper-based format to all municipal residents.

The survey focused on residents’ satisfaction with municipal services, where residents would like to see investments in municipal services and programs, and included a section on HalifACT, the municipality’s climate action Plan.

The results of the Municipal Services Survey are intended to inform the 2023/24 business planning and budgeting process. There were 4,030 responses to the survey. Results were provided to Regional Council on November 22, 2022. The report can be found here.

The Municipal Services Survey is conducted every two years, alternating with the more detailed and in-depth Resident Survey. The 2022 Municipal Services Survey is an abbreviated version of the 2021 Resident Survey and is intended to be a ‘pulse survey’ to supplement the more rigorous Resident Survey, at a lower cost.

The 2023/24 Budget consultation process also seeks to solicit public comment by inviting members of the public to provide feedback following each business unit budget and business plan presentation.

Will there be an opportunity for residents to provide input before the 2023/24 Budget is finalized?

Yes. Each business unit will present their proposed budget to the Budget Committee. 

The 2023-24 Budget & Business Planning Schedule can be found here (option 1). It is important to note that this schedule may be adjusted following direction from Regional Council at any stage of the budget process. Agendas, including presentation times, will be uploaded on halifax.ca/budget as they become available.

During each meeting, time will be set aside for residents to speak directly to Regional Council about budget priorities and provide insight and comments.

For residents to be added to the speakers list for virtual meetings, pre-registration will be required by no later than 4:30 p.m. the business day prior to the meeting. Registration information will be included on the meeting agenda page for each meeting. For any questions about registration, residents may contact the Clerk’s Office at 902.490.4210 or clerks@halifax.ca.

Regional Council will debate Budget changes and refer them for final decision on Tuesday, April 25, 2023.

Full approval of the budget is currently scheduled for Tuesday, April 25, 2023. Meeting dates may be subject to change and any new dates will be communicated on halifax.ca/budget.

What was the purpose of the Strategic Multi-Year Business Planning and Budget Process and 2023/24 Budget Outlook report?

The Strategic Multi-Year Business Planning and Budget Process and 2023/24 Budget Outlook report, presented to Regional Council on October 25, 2022, marked the start of the 2023/24 Budget and Business Planning process. This report provided a high-level overview of the background, changes and updates, proposed key dates and milestones, financial challenges and budget implications. 

What is the proposed 2023/24 Business Planning and Budget schedule?

On November 8, 2022, Regional Council approved the revised 2023-24 Budget & Business Planning Schedule as outlined in Option 1 of the Strategic Multi-Year Business Planning and Budget Process and 2023/24 Budget Outlook report

It is important to note that this schedule may be adjusted following direction from Regional Council at any stage of the budget process.

What are the next steps?

The upcoming reports and presentations include: 

  • Capital Update and Advanced Tenders Report on Tuesday, December 13, 2022 
  • Capital Budget Recommendation (Reserve Withdrawals, Multi-Year Projects) on Wednesday, January 18, 2023 
  • Assessment and Budget Direction Update on Wednesday, January 25, 2023 

The Business Unit and Budget Presentations (Budget Committee) will follow. 

Updates will be made available on halifax.ca/budget as they become available.

What did the approved 2022/23 Budget include?

In April 2022, Regional Council approved the 2022/23 Budget, which saw an increase to the average tax bill by 4.6 per cent. Part of the increase, 3.0 per cent, was directed specifically to HalifACT, the municipality’s climate action strategy. The remaining 1.6 per cent was used to fund the operations of the municipality. 

As the 2022/23 Budget was approved, inflation began to become more prevalent in the municipality, Canada, as well as the global economy. To hedge off the impact of inflation to the 2022/23 Budget, staff recommended using $8 million in surplus funds from the 2021/22 fiscal year.

As the municipality begins to build its budget and business plans for 2023/24, it is forced to tackle the
inflation that began in early 2022 and has since escalated. The mitigation efforts employed during 2022/23 are now depleted and the municipality is faced with balancing increasing cost of services with households already coping with inflation.

What are some highlights from the past year?

Throughout the many challenges and opportunities presented to the municipality, the municipality remained focused on fostering the growth of healthy and vibrant communities, a strong and diverse economy, and a commitment to environmental sustainability.

The cityscape continues to evolve as the municipality undertakes major redevelopments like the Cogswell District and Windsor Street Exchange. Addressing these main intersections in such a comprehensive way will be transformative for generations to come.  

The Integrated Mobility Plan continues guide the municipality’s investment in active transportation, transit, roadways and more. The municipality has made significant progress building a bikeway network in the regional centre, designed for people of all ages and abilities. In addition, the municipality has invested in transit infrastructure including the recently renovated Woodside Ferry Terminal and the new West Bedford Park & Ride, improving access to public transportation across the region.  

The municipality is prioritizing a commitment to diversity, inclusivity and equity. The ongoing advancement of the Accessibility, Anti-Black Racism and Women & Gender Equity strategies will continue to raise awareness and action to ensure municipal spaces, services and programs are accessible and welcoming for all. 

The municipality is leading the way in efforts to address climate change as outlined in the HalifACT climate action plan. 

A Strategic Performance Report 2021/22 was presented to Budget Committee on November 22, 2022, and included highlights, accomplishments and performance results associated with the previous year.

View highlights from the 2022/23 Budget in the 2022/23 Budget Overview, including $10 million in approved capital budget spending toward HalifACT, the municipality’s long-term climate action plan for the 2022/23 fiscal year.