Moncton floats tax hike after province freezes assessment

Moncton council has been asked to consider raising the city's tax rate for the first time in about a decade after the New Brunswick government froze property assessments.

Jacques Doucet, Moncton's general manager of financial services, told council at a committee meeting Monday that the freeze announced earlier this year would shave millions in forecast revenue that could have financed rising costs and new infrastructure.

"Today it was about preparing our council, that potentially we'll — council will need to make tough decisions on either having to increase the tax rate or not fund new priorities as fast as we were supposed to," Doucet told reporters after the meeting.

He presented three options: Hold the tax rate steady and potentially need to cut spending, a tax rate increase of 2.5 per cent, or an increase of 4.5 per cent.

No decisions were made Monday. Doucet said there's still a chance the city won't need to increase its rate. 

"Reduction of tax rate is still a possibility," he said.

The tax rate is multiplied by an assessed value to determine how much is owed in property taxes. 

Rapidly rising property assessment values, set by the province, have been a boon to to the city's finances over recent years. The city attempted to reduce the overall increase to tax bills by cutting its rate by 21 cents over the last four years.

The rate for most of the city is $1.3614 per $100 of assessed value. The city's operating budget this year is $223.8 million. 

Doucet said the last increase in the property tax rate for the entire city was about a decade ago. The rate has increased for former local service districts added to the city as part of local governance reforms in 2023. 

Many of the residential properties in the city benefit from the province's spike protection mechanism, which sets a 10 per cent annual limit for most properties.

Doucet said that cap meant the city could generally forecast how much assessment values, and therefore revenue, would increase. He said Moncton expected to get an additional $13 million based on recent assessment trends before the freeze. 

Finance Minister René Legacy in May said the assessment freeze would offer relief to taxpayers as the province looks at broader property tax reforms. 

Doucet's presentation to council noted "all political pressure from property tax revenues has been transferred to municipalities."

While council cast no votes on the issue Monday on the issue, several councillors spoke about the options Doucet laid out. 

Coun. Bryan Butler said he'd like the city to look at keeping the rate steady for the year, asking Doucet whether it would be feasible. 

"Yes, it's doable for one year," Doucet said. 

Coun. Charles Leger said it would be good to have a council discussion about what city spending could be cut or delayed if the rate is held steady. 

"I think if we could have that, I think it would be useful," Leger said.

"I appreciate the uncertainties, and certainly we need to reflect too on perhaps the pace at which we're going to be reinvesting in our community, and maybe we're going to be faced with that — we have to slow down, and that's just the the reality."

Funding unknown, could affect budget

Doucet said there are rising city costs that can't be immediately changed, such as negotiated contracts, and other inflationary costs. As a result, he said, the main way the city could cut spending would be on capital projects, which include things such as roads, municipal buildings and vehicles.

Other steps could include delaying filling staff positions or increasing fees for recreation or transit. 

Doucet said one uncertainty that could affect the budget is how much funding the city receives through provincial funding streams. He said, for example, that it's not known how much the city may get from a $45 million capital renewal fund.

Doucet said he expects to get more information by September and will return to council with an update and to seek directions on how to draft the budget.