Brandon residents could face double-digit tax increases for years to come: report

The City of Brandon says its "worst-case scenario" could see double-digit tax increases for residents in its 2024 budget — and similar hikes for the next decade.

A city-commissioned report by the accounting firm MNP, publicly released Friday,  found the city is not bringing in enough revenue to cover infrastructure costs.

The analysis, intended to help guide the city's work to "develop a sustainable funding model" for its 10-year financial plan, identified "low taxes and efficient municipal operations" as strengths.

But it found "there is clear indication that tax increases have not been sufficient to reflect inflation."

That's led to "diminished reserves at a time when Brandon requires significant reinvestment in infrastructure," according to the report.

It presented two scenarios to address that: a 13 per cent tax increase every year from 2024-27, followed by three per cent increases each year from 2028-33, or a tax hike of nine per cent per year for the next 10 years.

"After many years of the city choosing to keep taxes low, we're in a tight spot financially," city manager Ron Bowles said at a Friday news conference where the report was presented.

"It is clear that we need to take some action now to adjust … in order to implement reasonable and sensible tax increases."

However, he called the tax increases proposed in the report a "worst-case scenario."

"Cities across Canada are struggling with their infrastructure deficit," Bowles said. "You're paying for this aging infrastructure that we built in the '50s and '60s.… This is not a one-year problem."

Brandon, though, faces a number of systems that are "at capacity," he said.

"You know, our water system at capacity, our sewer system at capacity, our storm drainage system with climate change is over capacity.… We have to deal with these situations," said Bowles.

The city began working on its 2024 budget in September. Deliberations will take place in January.

City council is set to discuss the MNP report at its meeting on Monday.

Mayor Jeff Fawcett, who was not at Friday's news conference, told CBC the city commissioned the report to get a better sense of its current and future finances. 

"We often have budgets presented to us [with tax increases] that are at nine per cent or seven, eight per cent, and then by the time we get to our budget we generally come in around [the rate of] inflation and sometimes a little bit less," Fawcett said.

In 2023, the city saw a tax increase of only 1.6 per cent, while the inflation rate was 6.2 per cent.

The MNP report noted Brandon's tax rate is 47 per cent lower than comparable cities in Canada. 

The tax scenarios presented in the report assume the city's reserves will be significantly depleted to fund its capital plan. It projects reserves dropping from $54 million in 2023 to $7 million by 2030.

'The bills are due': prof

Doug Ramsey, a professor in Brandon University's department of rural development, says the conversation of under-taxing in the city has been going on for almost 25 years, with taxes remaining low while both inflation, and the city itself, grew.

"It's really quite disappointing that we've reached this point in our civic history," Ramsey said. "I didn't expect the wall to be this abrupt."

He said his home community of Norfolk County in southwestern Ontario faced a similar situation in 2020, with public outcry over an 8.4 per cent municipal tax hike, while museums, an art gallery and a hockey rink were closed.

Brandon is now backed into a corner and needs help, but the city wasn't making strategic investments along the way, he said.

That won't help when trying to negotiate with the provincial and federal governments for funding, he said.

"That wasn't done years ago when it needed to be," said Ramsey. "The bills are due and it's … going to be a shock for everyone."

Province 'needs to pay their fair share': manager

But Bowles said municipalities work at a disadvantage, since they collect a fraction of the taxes the provincial and federal governments do.

A provincial municipal funding freeze in place for years also hurt Brandon, Bowles says. That freeze was recently lifted, but that won't make up for lost ground over the last seven years, the city manager said.

"The province of Manitoba, along with the federal government, needs to pay their fair share," Bowles said. "We have very limited tools to collect [revenue], and yet this mounting infrastructure deficit is looming."

The city will have to pick and choose which projects it will lobby to get funding for from other levels of government, he said.

However, "the province is not going to hold us to task for keeping our taxes low and being lean.... They want us to grow. They want us to prosper."

Ian Bushie, the provincial minister for municipal and northern relations, said years of municipal funding freezes under the former Progressive Conservative government hurt municipalities, including Brandon.

In a statement, he said his NDP government — elected in October — is committed to providing stable funding for municipalities, and he looks forward "to speaking with the mayor on this issue and other municipal priorities."