Financial crunch may mean a bigger tax bill, St. John's councillor says

St. John's residents are being warned to expect a mill rate increase of 5.6 to 8.3per cent in the city's upcoming budget, and they should soon receive a brochure in their mailboxes explaining exactly why.

The city is sending out brochures explaining its budget situation, and the anticipated solutions, ahead of the December 10 budget speech.

"What we're announcing today is the kickoff to really the earliest significant public engagement we've ever done for the city's budget," said Coun.Dave Lane, after Monday's council meeting.

• Property taxes could go up this year, warns St. John's councillor

That budget is one that will have to include a tax increase to maintain services, due to increasing costs like electricity and a drop in revenues due to reassessed housing values, Lane said.

"In order to meet the legal requirement to balance our budget, it would require us to increase the mill rate by between 0.4 to 0.6 mills."

Higher expenses, lower revenues

The brochure explains the budget challenges facing the city, with forecasted expenses and revenues.

Housing values for the next budget will be based on the 2017 assessment year, which is true for all municipalities in the province, Lane said.Those values overall were down compared to the previous assessment year, in 2014.

That means less revenue for the city.

As well, some of the city's costs are going up. Electricity costs have increased, he said, as have debt servicing costs on infrastructure spending. Also, some city employees, including Metrobus employees and fire response staff, got salary increases.

The result is less money coming in to the city, which means the mill rate must go up if people want to avoid service cutswhich Lane said residents have indicated isthe case.

Those services have to meet the needs of a population that is both aging and growing, one of the few municipalitiesin the province seeing such increases.

"Right now the fiscal reality is that we have expenses that have gone up, we have facilities that are opening or that have expanded that we have to pay for, we have to staff them, and all of these demands have come from the public that we are responding to," Lane said.

'That is the decision that is before us'

The city plans to engage St. John's residents ahead of the December budget speech, Lane said, and the brochures that began arriving in mailboxes this week are the first step.

The 2016 budget included both tax increases and service cuts, and was met by considerable public outcry, which resulted in a program review.

"I think mostly what they didn't like was that they were caught off guard," Lane said. This process of engaging residents is meant to avoid that feeling.

In addition to the brochures, the city will hold two Facebook Live events on Oct. 2 and 26 and five public meetings around the city during that month. Residents can also get in touch online at Engage St. John's, he said.

"Through that discussion, that's when we can say to the publicdo you want us to make a significant change to service levels in order to keep tax levels where they are?Because that is the decision that is before us," he said.

"It's not a decision we can make lightly."

With files from Stephen Miller

Read more articles from CBCNewfoundland and Labrador