The good news is that we have yet to begin the 2024 budget process, but the bad news is that we already know the economic pressures we all face in our homes and businesses, and our finance team has projected the impact on our existing revenues vs costs. The staff report (https://midland.civicweb.net/document/45683/CSR-2023-76%202024%20Budget%20Outlook.pdf) offers some guidance about what we can expect to see as we get into the 2024 budget process late this fall.
These budgetary drivers (see report and image below), along with the 5% target set by the County of Simcoe indicate that the tax-supported increase for the 2024 budget year is trending towards the 5-7% range.
Here is some local news coverage: https://barrie.ctvnews.ca/midland-mayor-warns-of-potential-7-tax-hike-1.6577039
Staff expect a tax rate increase in this range which will allow service levels to be maintained while continuing to manage inflationary and supply chain management pressures. Over the coming months staff will undertake a detailed review of current and potential service levels, planned capital projects, and various financial strategies to refine this projection and to arrive at a budget that is deliverable to Council. Should service level reductions be necessary to achieve a reasonable tax rate increase, staff will prepare a service level change request for each significant item for Council consideration. This approach will ensure Council has a complete view of the draft 2024 budget before making decisions about individual service levels.
Council does not have full control over the tax levy. Of the average 2023 residential tax bill, approximately 57% is within the control of Council. The other 43% is largely comprised of services provided by agencies outside the normal department structure which include the County of Simcoe, Ontario Provincial Police, and the School Boards. The cost of these services has been historically difficult to influence. This means that services provided by the Town may need to absorb increases for services outside Council’s control to reach a reasonable overall tax rate increase.
Growing Our Tax Base
Clearly, growing our tax base with more homes and businesses, is a priority for Midland. While we don’t have targets from the Province like larger municipalities, I am acting as though we do and helping to move the over 5,000 homes in the development pipeline ahead for our community. We know how desirable our community (and North Simcoe) is to people looking to settle outside of the GTA and into communities on the shores of Georgian Bay.
We have repaired relationships with developers who are in the process building residential subdivisions (rentals and town homes) and new commercial units but despite streamlined approval processes, we cannot compel them to put shovels in the ground while the economy is such that it is. This is a real problem for growth throughout the Province and Country and beyond Midland’s ability to influence. So, we will keep looking for development opportunities, surplus developable lands and work with developers who want to get homes built in Midland.
Another aggravating factor is the largely misapplied Natural Heritage Designation that was part of the Town’s new Official Plan. It triggered a flurry of costly appeals and stifles growth and development without any evidence supporting the designation in the first place. I am working on wholesale solutions to this mistake (that impacts over 800 properties in Midland’s Settlement Area) and staff are working on a case-by-case basis with developers to clear this self-imposed hurdle to get home built on lands that should never have had this designation applied.
This is a long game and not a short fix to budgetary pressures, but one that your Council and Town staff will continue to pursue this term.
User Fees / Non-Resident Fees – It Is Time To Take This Seriously
The Town should strive to recover the full cost of services from user fees (where permitted by legislation) to minimize subsidies from the tax levy.
Example: The 2024 MPL budget will need to account for the lost user-based contributions from Tiny Township. These annual contributions, in excess of $100,000, have historically supported the library’s operations, and therefore this lost revenue is a direct hit to their bottom line.
Costs for non-Midland residents will need to increase substantially. We cannot continue to subsidize our neighbours and lose money on shared services. Our residents pay high taxes to support all the capital and operational costs and it is unfair to charge those who don’t the same as those who do.
Full cost recovery is subject to considerations such as:
1. Extent of private, commercial and community benefit.
2. Use of services by non-residents and consideration for a North Simcoe approach.
3. Rates for commercially available services.
4. Impact of changing user fees on demand levels/utilization rates.
Increasing the Town’s reliance on user fee revenue can benefit residents by decreasing the proportion of costs funded from the tax levy. However, it also exposes the Town to market risks where revenue targets are not met, and cost mitigation options are limited.
The 2024 Budget will highlight opportunities to allow more participation from visitors to the Community. The feasibility of using facilities and other assets to generate additional revenue will also be considered (e.g. naming rights, market lease rates, non-resident fees and advertising).
Please take the time to review this report to understand what we can expect to see in the upcoming draft budget this December.