Spend and suffer; or save and suffer: Mississauga approves 2.3% tax increase for 2024, homeowners will pay an extra 6.8% including regional share
The ongoing impacts of inflation, infrastructure pressure from the PC government’s torqued housing plan, high borrowing rates and the cost of managing a booming city. This is the economic climate that defined the Mississauga budget process to establish a financial blueprint for 2024.
City Council on Tuesday passed the budget for the year ahead with a 2.3 percent increase on the City’s share, combined with a 4.5 percent increase to the Peel Region share voted for by the same 12 members, resulting in an overall spike of 6.8 percent.
As the city and region continue to recover from the impacts of COVID-19, municipal officials have simultaneously had to juggle infrastructure repair and replacement costs, while planning for a future-ready transit system and the unprecedented costs associated with the construction of 120,000 new housing units by 2031, as mandated by the PC government under its ambitious Bill 23. The sudden change in direction by the Doug Ford government, reversing its earlier decision to break up Peel Region, came after staff and elected officials inside City Hall worked to minimize impacts to service delivery, while trying to prioritize spending on Mississauga’s most pressing needs.
“Adding to the challenge all municipalities face to maintain and build needed infrastructure, inflation is impacting the City’s capital program, with increases in the cost of materials causing project costs to rise significantly,” the 2024 budget document states. “After many years of budget reductions it is becoming increasingly challenging to find savings that do not negatively impact service delivery.”
Projections from staff had previously determined that over the next ten years, on average, the City would be required to spend $206.6 million annually to maintain and replace existing assets. Additional funding of approximately $40 to $45 million per year would be needed to keep infrastructure in decent condition. Now, 2024 estimates show that over the 10-year period the City must spend, on average, $240.2 million annually to maintain existing assets and replace those that are too old.
Despite the City’s need to allocate funding to keep its infrastructure from failing, Councillor Brad Butt presented a notice of motion during a December 6 meeting requesting “that the proposed 2024 Capital Infrastructure and Debt Repayment Levy be reduced from three percent to two percent.” A similar motion was also presented to the Region to get the tax increase down to a “lower, more manageable level.”
“The problem is the combined property tax increase between the city and the region is not appropriate in this day and time,” he told councillors. “I think we have to do our part here at the city and I think a modest reduction of the infrastructure levy from three percent to two percent is appropriate and is affordable and needs to be done.”
Shari Lichterman, the City’s CAO, noted staff increased the infrastructure levy and debt repayment levy to three percent in response to significant inflation impacting capital programs. A breakdown from City staff showed adjusting the infrastructure levy from three to two percent would result in cost savings of roughly $24 for residents, while $6.4 million for critical infrastructure would be lost.
The dilemma illustrates the fundamental issue facing all governments: ongoing inflation across sectors puts decision makers between a rock and a hard place—cut spending to help taxpayers who then suffer with a lack of services; or increase taxes to provide what is needed, while residents are forced to struggle with even higher costs.
The City’s Director of Finance Marisa Chiu told councillors staff did some modelling around the levy reduction and if they were to bring it down one percent it would mean either a depletion of the City’s tax capital balance by 2033 or staff would have to cut its capital projects by roughly $50 million.
“Some examples of these projects are our hybrid (bus) acquisition, our replacements, we may need to reduce some of the work related to the roadway rehabilitation or other life cycle renewal projects,” she explained. “With our significant increase to our interest rates recently as well as inflation, this three percent levy is determined to be necessary in order for the city to maintain our healthy tax capital reserve and also to fund our infrastructure needs moving forward.”
“People are struggling,” Councillor Alvin Tedjo acknowledged. “There’s only so many tools that we have to help the broader population and I think this is not an unreasonable request. I think for one year — we’re not talking about this every year — but where we can find efficiencies and save people some tax dollars at the end of the day, at the Region or the City, I think this is appropriate.”
Lichterman noted the reduction to the levy would be compounding, adding that if council chooses to reduce it for 2024 it’s not built into the City’s base budget for future years, “so it does have an impact that lasts.”
“Then it appears next year if we put it back then it's a big tax increase,” Mayor Bonnie Crombie cautioned. “This way it's just stable and people know that this is our interest and debt repayment levy… but once we cut it by a percent because we deem it to be a difficult year [and] next year could be an equally difficult year, then it looks like a one percent increase so I’m in favour of stabilization of this tax rate.”
“We have to be consistent and we have to do what’s in the best interest of our city.”
Councillor Butt’s motion failed.
The reality of these challenging economic times is detailed within the pages of the City’s 2024 financial blueprint, which lays out a 2.34 percent tax increase on the City’s share of the overall bill for residential property owners to help fund $679.5 million in operating costs — a $45 million (6.3 percent) increase over 2023. The overall gross capital budget for 2024 is $531.3 million “and includes substantial investments in maintaining the City’s infrastructure in a state of good repair.”
As part of the PC government’s “strong mayor powers,” granted to some municipalities across the province including Mississauga, authority to propose the budget now rests solely with the mayor (Crombie will step down from the role next month to takeover the Ontario Liberal leadership). In July, just a few weeks after announcing her bid for the Liberal leadership, Crombie directed staff to prepare the 2024 budget and, in the six weeks leading up to budget deliberations, she took a leave of absence to campaign across the province. She confirmed ahead of her departure that regardless of the outcome, she would return from her leave to oversee the City’s 2024 budget process.
Crombie and council, under the new mayor’s powers, passed the 2024 budget Tuesday, with homeowners in Mississauga to pay roughly $150, on average, more for property taxes next year on the City’s portion of the tax bill — down from an increase of $183 in 2023 — (the City, according to staff, used an average assessed value of $730,000).
The Region of Peel approved a 4.5 percent hike on its share of the overall tax bill for next year. Mississauga homeowners will, overall, see a 6.8 percent increase in the new year, when the Region’s and City’s share are combined. In total, including a 6.8 percent increase voted on by regional councillors (including Mississauga’s 12 local elected officials who sit on both councils) for the 2024 utility bill, Mississauga residents living in a home with the average assessed value will pay, approximately, $473 more for property taxes and utilities next year: $150 for the Mississauga share, $245 for the Region’s share and $78 for the utility increase (these dollar figures are based on different average assessed home values used by the Region and City, so the final calculation will be slightly different, but the same percentage increases will be reflected).
Mayor Bonnie Crombie presided over her last Mississauga budget, as she gets ready to step down to lead the Ontario Liberal Party.
(Alexis Wright/The Pointer)
Crombie described the City’s increase as “modest” in a press release Tuesday, achieved by “being extremely measured when considering anything new.”
Mississauga, she said, is looking at different ways to help fund the city's most pressing needs, as dozens of new development projects will create significant population pressures, without historic contributions from builders, thanks to Ford's Bill 23, which eliminates the ability of municipalities to charge many of the fees traditionally paid by developers for surrounding infrastructure required by those who buy units in new projects. The property tax base can not cover all these costs, in addition to investments in housing, public safety, waste management and all the other services municipalities are responsible for. “The largest investment within the budget," Crombie highlighted, as part of the City's responsibility for managing growth, "is for transit as we look to increase service levels and support our community’s growth.”
While new projects typically impact the capital and operating budget, 13 of the 21 new initiatives council approved for 2024 will have no impact on the property tax due to revenues associated with them outside the tax base. Key proposed projects for 2024 that will require additional spending include an expansion of the City’s MiWay transit service at a cost of $3.9 million for additional staff and the opening of a new fire station in Ward 9 at a cost of $2.2 million to fund the 20 employees required to service it.
Some of the financial pressures facing City Hall were alleviated last week when the PC government announced it would no longer be dissolving the Region of Peel, eliminating potential financial implications as Mississauga transitioned to take on regional services. This will not happen, for now (Crombie suggested service delivery is already shifting from the upper-tier municipal government to the lower tier). Minister of Municipal Affairs and Housing Paul Calandra said legislation will be introduced next year to repeal the Hazel McCallion Act, which was passed to dissolve Peel. He said the Transition Board that had been working on dissolution will now be “recalibrated” to reduce duplication between the two levels of local government and find efficiencies.
Unknowns also linger around the financial impacts of the PC government’s Bill 23, which calls for the construction of 1.5 million homes by 2031, 120,000 in Mississauga — the same number of new homes the City had planned to add over 30 years.
During a visit to Mississauga earlier this year, Premier Doug Ford claimed the Province would make municipalities “whole,” providing the necessary financial support required for the infrastructure to service the 1.5 million homes. The assurance came after elected officials and municipalities criticized the legislation for stripping away revenues that have traditionally come from developers for associated infrastructure costs to support their projects; while forcing growth into areas that do not have the infrastructure to support it. Ford has offered few details on when and how municipalities will be funded to cover billions of dollars for infrastructure to support 1.5 million new homes.
Mississauga conducted its own preliminary research to determine the financial impact of the legislation in November last year, revealing the City would lose an estimated $815 to $885 million in development charges for infrastructure over the next decade. The 2024 budget says, “Accommodating this level of housing growth will require government and industry support,” in order for the municipality to provide the mandated number of units it has been assigned, which staff and elected officials have assured can be achieved, with proper support.
The City has added $5 billion to the 10-year capital forecast as part of the 2024 budget to meet projected infrastructure needs. Although the purpose of Bill 23 is to accelerate housing supply, it lowers the rates of the development charges and parkland fees that municipalities collect from developers that help municipalities offset the cost of the infrastructure required for services like roads, utilities, transit, parks, community centres, libraries and fire stations. While the approved tax increase on the City’s share of the property tax bill remains around the historic rate of inflation, the $5 billion added as a result of Bill 23 over the next 10 years will place significant pressure on the tax base if funding assistance is not offered by the PCs to pay for Ford’s aggressive housing plan.
The latest budget proposes four new initiatives within the City’s planning and building department in an effort to prepare for the complexities caused by the PC legislation including the hiring of seven new employees in 2024 “to respond to the challenges of Bill 23 and its impacts.” New staff will oversee enforcement and inspections, zoning planning and building services technologies.
(City of Mississauga)
Transit once again accounts for the largest segment of the City’s 2024 capital budget, $144.2 million (or 27 percent), a decrease from the $168 million in 2023. In 2022, MiWay announced it would no longer purchase any new diesel buses for the refurbishment or replacement of existing buses. The City has pushed toward electrifying its transit fleet and the majority of the capital for the upcoming year is allocated for the purchase of hybrid buses.
Transit will see a 3.2 percent (just under $3.4 million) decrease in its operating budget due to decreases in diesel prices and an increase in fare revenues as ridership grows following the pandemic. Staff are also predicting a surge in future revenue anticipated from fare-rate increases approved by council in October after a staff report revealed MiWay ridership has recovered well over pre-pandemic levels, to 109 percent of what was seen in 2019 as of this past August, with ridership expected to continue increasing through the remainder of 2023 and into 2024.
The same trend is improving revenues across service delivery areas.
“The 2024 Budget reflects the emerging post-pandemic economy. As people in the city have returned to pre-pandemic activities, the use of City services has increased, and continues to increase,” the budget states.
To meet the anticipated demand and address overcrowding on routes where ridership has grown significantly the transit budget includes a four percent increase in service hours (57,000 hours) in 2024. New permanent positions are being created at a cost of $3.94 million which will see 44 operators, two route supervisors, a general service person, a report clerk, and an operations trainer added to the City’s transit personnel.
Council has also approved $29.8 million for Mississauga’s Fire and Emergency Services (MFES) to help meet the department’s long-term infrastructure plan to address the recommendations made in the 2019 Building Condition Audit which revealed the department’s infrastructure was in bad shape. The City will be making capital investments in 2024 for the purchase of new equipment and the refurbishment of existing equipment, with $24.6 million of Mississauga Fire’s capital budget directed toward stations and auxiliary buildings. An additional $5.25 million is slated for vehicles and equipment.
To meet the established national standard of responding to a call within 240 seconds 90 percent of the time, MFES is investing in new fire station infrastructure and training of emergency services staff, as well as working to develop a rigorous life cycle replacement plan for fire fleet and equipment. In 2023, MFES met the response target an estimated 45 percent of the time, a decrease from 47 percent in 2022 and 50 percent in 2021. For 2024, the department wants to meet the response standard 47 percent of the time.
MFES previously committed to building six fire stations over a 12-year horizon as part of Mississauga’s 2019 Fire Master Plan, after council neglect for decades left the city with only half the number of stations it should have had, to keep up with growth. Station 125, located at Tenth Line and Aquitaine Avenue, is scheduled to open in 2024 and will put the City’s fire station count at 22 — for a city its size, Mississauga should have 44 stations. As part of the 2024 budget, 20 new full-time employees will staff Station 125, three new members will be added for a fire inspection program (an ongoing multi-year initiative) and a new division chief position will come on board.
Other major spending in the 2024 budget includes $33.7 million for stormwater infrastructure and a $104 million investment, accounting for 20 percent of the overall capital budget, in local roads.
As the City works to keep critical infrastructure in good shape after decades of budgets that neglected future needs, its infrastructure requires widespread improvements. The 2024 budget highlights “state-of-good-repair projects, for the maintenance and replacement of existing infrastructure, are the City’s first priority.” To keep infrastructure from failing, $40 million will be invested in renovating existing assets and building new ones.
“The City’s current funding does not fully fund all capital requirements, but balances the need to maintain City infrastructure, fund new projects as required, and minimize debt,” the budget document notes. Regarding federal and provincial infrastructure funding programs, the document highlights that “this funding does not keep up with the increasing challenges the City faces to keep Mississauga’s infrastructure in a state of good repair.” With 65 percent of City buildings being about 30-years-old, only two-thirds are identified as being in fair-to-good condition.
Mississauga City staff are including a three-percent infrastructure levy for the next three years to help maintain critical infrastructure in a state of good repair after years of financial neglect.
(Alexis Wright/The Pointer)
City staff have included a special infrastructure levy in each of the 2024–2027 budgets. Funding from federal and provincial governments does not meet the increasing infrastructure gap and “the City’s current funding sources do not allow for full funding of the City’s state-of-good-repair needs,” with Mississauga reporting a $44 million infrastructure shortfall for 2024.
Crombie, who will soon step down, said the City is looking at alternatives, as the current funding structure municipalities are forced to use, is no longer working. The property tax base simply cannot support billions of dollars needed for infrastructure, billions more to accommodate explosive growth mandated by the province and ongoing pressures created by federal immigration policies, especially for a city like Mississauga where so many continue to settle.
“We are exploring new opportunities,” she said, following the passage of a budget that will see homeowners' taxes rise by almost 7 percent, in total, next year. She said these new revenue sources have to be found, to help Mississauga with critical needs including “housing, transportation, public safety and mitigating climate change.”
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