Faced with a steep rise in property taxes, Nanaimo citizens questioned city council members and staff about how taxpayers’ money is spent at a recent e-town hall meeting.
Council and staff fielded more than 20 queries from the gallery and online during the one-hour long meeting Monday, Dec. 2, that featured a city-produced video overview of services and operations, followed by a rundown of the city’s 2025-29 draft financial plan from Laura Mercer, general manager of corporate services.
The city’s operating budget for 2025 is $214 million – $13 million more than 2024, due to inflation in wages, benefits, RCMP contract, added firefighting personnel, equipment purchases, and goods and services ranging from concrete to IT software. The draft financial plan leaves taxpayers facing a possible 8.7-per cent rise in annual property taxes or about $293, for a typical Nanaimo home assessed at $783,808. It’s the highest tax increase in at least the past 10 years.
Other factors driving the increase include hiring additional staff to maintain service levels to match the city’s growth, Mercer said, and the economy is still “recovering from the COVID-19 pandemic which saw higher inflationary increases than we’ve seen in recent history.”
Dale Burgos, city communications and community relations manager, moderated the e-town hall and read questions submitted from the public, such as a query about which projects get prioritized and which ones get deferred in case of a funding shortfall.
Mercer said in such cases, budgets are sent back to the city’s various departments, where staff review projects and operations, line by line, to determine those most critical.
“We do that until we have a balanced project budget,” Mercer said. “With operations … we have a modified, zero-based budgeting. So we start with our wage contracts, because those are always set by contract … and then each department goes through theirs … and justify the costs that they put in each one of them.”
The city was also asked about rising sewer and water rates. Bill Sims, general manager of engineering and public works, said B.C. municipalities aren’t allowed to earn and retain profits from provided services and the fee rates ensure those services are financially self-sustaining.
“The increases in sewer and water fund everything from asset management projects [to] the long-term operation and capital projects associated with both of those utilities,” Sims said.
Coun. Ben Geselbracht said increased rates also ensure money goes into reserve funds to pay for major infrastructure replacement.
The city was also asked why the actual tax increases never match increases projected years earlier, with the 2025 projected tax increase of 8.7 per cent, for example, far exceeding a 2.6 per cent increase that had been projected in the 2021 budget.
Mercer said unforeseen conditions can impact taxation forecasts in a five-year financial plan, which the city is required by the province to provide.
“Year one is going to be the most accurate because that’s the most current information we have,” she said. “The following four years … are based on commitments we know today; however, in 2021 we didn’t know that a fire master plan was going to recommend [hiring] 40 firefighters, so that is a significant impact in those years that those came on board … as new information comes along and we update those budgets … That budget’s going to change and if I had a crystal ball, that would be great.”
Other citizens asked about freezing taxes, even if it meant deferring projects, and Coun. Sheryl Armstrong said the current budgeting process is when decisions are made about "what stays and what goes."
Mayor Leonard Krog warned against freezing taxes and deferring infrastructure renewal, pointing to water mains that burst when their life expectancy proves shorter than predicted.
“Those have to be replaced…" he said. "If we choose not to do the work, for whatever reason, and try to go to a zero tax increase – and I’m being directly critical of those municipalities that are attempting to do so – there will be consequences."
Coun. Janice Perrino said she was in Calgary when its water main ruptured in the spring.
“It was unbelievable to see what can happen so quickly,” Perrino said. “The truth of it is, we have to do these projects. If we don’t do them, they’re just going to build up and continue on being even more expensive.”
Geselbracht pointed out that the city is restricted to raising revenue through property taxes. Municipalities, he said, are responsible for 60 per cent of public infrastructure, yet only collect about 10 to 12 per cent of tax revenue.
“We rely primarily on property taxes, which isn’t a very flexible way of taxation, where the province and the federal government have income tax, they have sales taxes, corporate taxes. Property taxes don’t really respond to changes in the economy,” Geselbracht said.
Municipalities also face “downloading” by higher levels of government, taking a share of the responsibility for housing, addiction, mental health and social disorder challenges that are dealt with through municipally funded emergency services. Even climate change, he said, now impacts municipal infrastructure with sewer pipes failing because of increasing rain volumes.
“That wasn’t anticipated … and we’re not getting the revenue, for example, from the carbon tax,” Geselbracht said. “This same conversation is happening right across the country. Every municipality is worried about the tax increases because we can’t keep up with the responsibilities … that have been downloaded to us. It’s something that council’s very aware of and that we are lobbying at the provincial level to make these changes … Municipalities and local governments are stretched to the limit … and I think that’s a change that needs to occur.”
