Fiscal Responsibility:

An Essential Element in Uncertain Times

August 17, 2020

Charla Robinson, President

As the challenges of COVID-19 persist, financial sustainability is top of mind for business owners and operators. National and local business surveys alike indicate that there is real concern about the long-term impacts of public health measures on business viability. In a recent Statistics Canada poll, approximately 30% of business owners questioned whether their operations would be able to survive for the next 12 months in the current climate. These heightened levels of anxiety and uncertainty among our Members are palpable in every discussion I have with them.

The City of Thunder Bay’s financial picture is also unclear with a forecasted $7 million deficit this year and limited information on whether financial support will be available for 2021 and beyond. In a recent memo to Council, City Manager Norm Gale indicated, “We have low confidence in what our future operating budgets will look like.”

The city’s long-standing financial challenges are well-documented: high property taxes for businesses and residents, higher than average debt levels, and a growing $22 million annual infrastructure deficit. In addition, our community is struggling to deal with significant social issues related to substance abuse, poverty, homelessness, and crime – each of which requires significant resources to address.

To address some of these issues, Council is engaged in a Program and Service Review that recommends 45 specific improvements related to cost reduction, process efficiency, and prioritization through strategic planning and performance measurements. Council is scheduled to discuss the recommendations next month and develop an action plan on how to move forward. City Administration is also preparing a 2021 budget directions document for Council consideration on August 24 to provide insight into the starting point on next year’s tax levy increase. This information will be a helpful framework for the difficult decisions that are coming in the months and years ahead.

Nearly 32% of total taxes collected by the city are paid by local businesses. As such, business owners are looking at the City’s financial decisions with enhanced scrutiny as many are already dealing with reduced revenues and higher expenses. Further cost increases due to a potential 2021 tax levy increase are troubling, along with the realization that each property’s share of the tax bill pie may increase if neighbouring businesses are unable to survive the pandemic.

Considering the current recession and the difficult economic times facing all taxpayers, fiscal prudence is required. This is not the right time to commit to big new spending projects, no matter how worthwhile they may be. To proceed with a significant new capital project without due diligence does not display the fiscal responsibility and long-term approach to sustainability that each Council Member pledged to pursue during the 2018 municipal election.

That’s why the Chamber is recommending that City Council delay the ratification of the Multi-use Indoor Sports Facility pending the following:

  • Confirmation of project funding from other levels of government;
  • Completion of the 2021 Municipal Budget process;
  • Development of an action plan to address the recommendations of the Program and Service Review; and an
  • Examination of current business continuity impacts

The decisions made today will have financial ramifications for years to come. I encourage all Chamber Members to get engaged on this important issue by calling or emailing your Councillor to share your perspective.

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