Council Update: Budget 2025

February is always the busiest month on the City Hall calendar as Council gets deep into budget deliberations. During HRM’s budget process, each department presents their plan for the year to Council. As we review all the information from the various departments, Councillors have the opportunity to move potential changes that we want to consider to the budget to the budget adjustment list (mostly opportunities to do more, but also potential cuts) for further consideration. Once Council has finished reviewing all the departments, we review everything on the adjustment list to decide what’s in and what’s out, resulting in the complete municipal budget.

This isn’t an easy year. Inflation has played havoc with HRM’s costs, and growth is adding to HRM’s service pressures. The starting place for this year’s budget was a gap of about $70 million. Salaries ($44,000,000), utilities ($2,000,000), capital projects that aren’t eligible for debt financing ($19,000,000) and contracts ($9,000,000) are creating a lot of pressure. Staff’s initial draft would see an increase in the tax bill (combined impact of assessment and rate) of 7.6%, or $189 a year for the average home (average home is an assessment capped property of $338,500). This would mean an increase in the actual residential rate of $0.770 to $0.791 per $100 of assessed value. This latter point is a political challenge since the Mayor campaigned on not increasing the actual rate.

Budget Adjustment List
At this point, Council has finished its review of all the departments. The resulting budget adjustment list has the potential to add slightly more to this year’s tax pressure. Below is the list of additional items that Council will consider that was generated during our review:

• Neighbour mediation program ($100,000)
• Community Crisis Diversion Team ($463,000)
• Day Centre and after-hours team for encampment response ($1,650,000)
• JustFOOD program ($328,900)
• 10 additional firefighters ($215,000, full salary impacts in 2026)
• 14 additional RCMP officers ($1,418,700)
• Youth advocate program ($254,500)
• One sport field technician for field maintenance ($57,400)
• Staff and maintenance to operate 10 additional buses ($2,137,000)
• Accelerate delivery of heritage conservation districts ($310,000)
• Additional HR staff to support transit ($113,800)

Council also added one potential cut to the list

• Eliminate tree planting in the urban forestry program ($1,836,000)

The net impact of implementing everything on the budget adjustment list would be an additional $17 a year for the average homeowner ($23 if Council choose not to axe the urban forestry program) bringing the total of the starting budget plus adjustments to $206 instead of $189. I’m not really partial to hiring a whack more RCMP officers, but even if you include them, and put urban forestry back in, it’s just $23 more a year. $23 to do right by the homeless, improve transit reliability, and take meaningful steps towards police detasking. Council spends a lot of time focussed on the percentage increase but it’s worth remembering that in real terms, the adjustment list won’t add a whole lot to most people’s bill.

There are also a few other items circling that don’t have specific dollar values attached to them that Council requested briefings on. Staff will come back with more information and that could result in further budgetary changes:

• Additional funding for better collision data reporting in Public Works
• Cutting the police armoured vehicle purchases
• Increasing the road safety budget
• Ross Road realignment (not actually doable even if Council had the money according to staff as the project isn’t ready)
• Not hiring a training specialist or community outreach coordinator in the new Public Safety unit
• Firefighter cancer screening

Homelessness Supports
Of everything on the budget adjustment list, the one item that is an absolute must for me is the funding for the Day Centre and the the After Hours Individualized Mobile Engagement Team (AIM Team). Homelessness is a major issue and has had significant impacts in District 5. Most of the needed services are Provincial, but HRM needs to help where we can and there is a lot of potential here for the municipality to do some good.

A Day Centre is a project that HRM and the Province have agreed to jointly fund. The goal is to provide a space that’s open during the day when shelters are closed where services such as food, showers, laundry, medical, storage, and links to other support providers. In the absence of a Day Centre, the burden of providing support is very much falling on our Libraries since the Library is really one of the only places that everyone is welcome. The Library does good work, but they’re not designed to provide the level of specialized support that would be available at a Day Centre.

Two years ago, HRM and the Province each budgeted $1,500,000 for a Day Centre and we’ve been trying to find a space ever since (private-sector landlords mostly won’t rent to us when they learn that it’s for services to the homeless). After a long hunt, HRM is working on two potential options and the project is ever so close to now actually happening. Costs are up though and it requires Council to commit an additional $150,000. It would make no sense to walk away now after trying to get this off the ground for the last two years over $150,000, especially when there is $1,650,000 of Provincial matching funding on the line. A Day Centre will do a lot of good and is an important part of our homelessness response.

The AIM Team has some similar complexities around being already underway. The AIM Team started work in January and provides support at encampments and to the homeless population outside of the 8-4 Monday to Friday window. This is important as evictions often happen outside 8-4 and issues at encampments are frequent in the evening hours when the only potential response is police. There are also folks living at encampments who are never there during the day when support workers visit.

The AIM Team started work in January and have already responded to a whack of calls. They connect folks to services, provide folks with emergency supplies, help resolve conflicts at encampments, and are available to respond to emergency calls (like the guy who was discharged from the hospital two weeks ago with nothing on his feet except those disposable hospital slip-on booties). In January, the AIM team responded to four suicide/mental health calls. This is important and meaningful work that is improving the lives of people who are stuck outside while also reducing impacts on surrounding communities. To not fund this team and shut them down after just three months of operation would be incredibly short-sighted and will make the homelessness situation worse for everyone, house and unhoused. My words on this at Council.

Both the AIM Team and Day Centre should have been built into the budget since Council had already approved them, but staff didn’t do that so now they’re on the adjustment list awaiting a decision from Council. Hopefully Council will choose to fund this. I can’t vote for a budget that doesn’t.

The Mayor’s Pitch
At our last budget meeting on Wednesday, Mayor Fillmore put forward a motion to consider slashing over $20,000,000 million from the budget. The goal is to minimize the tax bill increase and allow the Mayor to keep his promise of not increasing the tax rate (HRM would take the assessment lift, but not change the residential rate). The Mayor is proposing:

• Drawing down the Central Library Reserve ($10,000,000)
• Increase the deed transfer tax estimate by $3,000,000 (not the rate just how much HRM is projecting in the budget)
• Reduce the Climate Action Tax by 1/3 ($6,000,000)
• Eliminate under-used land-line phones ($600,000)
• Charge insurance companies for HRM Fire response to calls on provincial highways ($250,000)
• Cut HRM’s tree planting program ($1,000,000)
• Others that the CAO might identify
• A comprehensive review of current vacancies and new full-time employees proposed in the budget to find cost savings

Staff will come back with a detailed report on the Mayor’s pitch in March. I will give the Mayor credit here for trying to follow through on what he promised. The problem is that there are a lot of downsides to fulfilling his promise. Slashing programs and services isn’t something I have ever supported. It has never been part of any of my platforms. Some of the stuff on the mayor’s list I can support, some of it I have concerns with and need more information, and two of the items are just an absolute no for me.

Central Library:
Using the $10,000,000 Central Library reserve may not be a big deal. The Central Library is the only HRM facility with its own dedicated reserve fund aimed at saving for its eventual refurbishment/replacement in some distant decade. Instead of a dedicated reserve for the Central Library, HRM should probably be contributing to a general major facilities reserve so that major projects put less pressure on the municipal budget. A reserve for just the Central Library is really a pretty narrow approach.

So we can spend that $10,000,000 right? Maybe. The problem with spending HRM’s savings is that those funds, once-used, are gone. Using savings to fund one-time costs is fine, but using savings to fund ongoing operations is reckless and how government’s get into financial trouble.

On the whole, past Council’s haven’t shown any real dedication to prudence when it comes to saving. Council’s priorities for the last several years has been minimizing taxes and paying for capital projects with debt. HRM is basically always taking out a mortgage with very little available for a down payment, making us very dependent on funding from other orders of government.

Debt isn’t bad. It’s a fair way of spreading costs and benefits out over time, but it does mean you pay more in the end. Debt means higher taxes to come. When Council has had conversations in the past about saving more, it was often myself, Morse and Mason trying to carry an argument (and losing) that we should use volatile revenues like deed transfer tax or one-time surpluses to fill HRM’s reserves. We were never really able to overcome the temptation of short-term thinking and HRM often used found money to lessen taxes. There just aren’t any political points to be had in saving for the future.

So whether using the Central Library reserve to reduce the tax impact this year is a good idea or not will very much depend how it’s done. We should probably use that reserve for other major projects, like the Forum, or Cogswell debt, but if it’s used to offset one-time projects that’s probably okay. If it’s used to fund ongoing operations, creating a structural deficit that has to be made up in 2026, that’s really not at all fiscally responsible. The details will matter with this one.

Deed Transfer Tax:
Increasing the forecasted amount for deed transfer tax could be okay, but it adds more risk to HRM’s budget because deed transfer tax revenues are very volatile. Increasing the forecast may balance the budget on paper, but if the figures end up being too optimistic, HRM will be left with a deficit to make up. This has happened before.

Declines in deed transfer tax revenue combined with overly rosy forecasts over the last two years have already put HRM in a bind. Staff cautioned Council many times that deed transfer tax was volatile and dangerous to rely on. Being cautious around deed transfer estimates is often how HRM ended up with surpluses before 2022. HRM would budget cautiously and then deed transfer revenues would out-perform, producing surpluses. Those surpluses then became a regular point of disagreement at Council as to whether HRM should save or spend. Staff eventually caved to the political pressure and significantly upped deed transfer forecasts (essentially removing the cushion) just in time for the real estate market to turn on us in 2022/2023. In retirement, I’m betting HRM’s former Finance Director, Jane Fraser, has enjoyed a quiet told you so moment!

We should be very cautious about what we project in terms of deed transfer tax as that has burned HRM already. I can’t say right now whether increasing the deed transfer estimate by a relatively modest $3,000,000 is an acceptable risk, but in principle, it does go against my preferred financial approach of budgeting conservatively, then using any surpluses that result from that prudence to offset debt from capital projects. This needs more evaluation from staff.

Trees:
Cutting HRM’s tree planting program had already been moved to the budget adjustment list by Councillor Deagle-Gammon during the Public Works presentation so having the Mayor put it forward as well was pretty much redundant (interestingly the figure in the mayor’s motion was different than that from the Public Work’s budget presentation so not sure if the Mayor was intending to leave a few trees to plant or not). It’s a proposed cut that I find very frustrating. Trees provide so many benefits from cooling, to air purification, habitat, traffic calming, carbon storage, stormwater management, improved property values, health benefits, etc. They provide so much and unlike most of what we spend money on, they last decades and actually increase in value with each passing year (a mature tree provides even more benefits than a young one).

Despite everything that trees provide, Council tends to see them as optional and an easy place to cut. It’s short-sighted. HRM already cut the tree program in 2024, a program that was already never fully funded for the entire previous decade. I managed to move the needle several times during budget debates in the past, but I was never able to get past Councils to fully commit to the planting targets set out in the urban forestry plan. HRM achieved about 75% of what the plan called for and then took the launch of the new urban forestry planning process as an excuse to skip planting in 2024.

Sadly, from the mood around the room, it seems we’re going backwards on this once again and tree planting is heading for the wood chipper. Two years of little to no tree planting on top of falling short of targets over the previous 10 years. Here’s a great video on HRM’s forestry program by Planifax that nicely lays out why we should actually prioritize urban forestry instead of saying we do, but never properly funding it.

Staffing Review:
Hard to say what the real impact of this might be. A comprehensive review in just a few weeks might be a stretch. I think it’s important that when staff comes back to Council with a response that they’re clear about what the impacts of a staffing freeze would be. HRM went through a period when Richard Butts was CAO of greatly constraining hiring and keeping vacant positions vacant. Butts saved money, but a whole lot of work went undone. Whether we were better off in the end is debatable.

If HRM goes down that path again, I suspect that some of my very same colleagues who might support this will also be upset in a year or two when stuff they’re interested in just doesn’t get done. It’s easy to be in favour of cutting staff when the impacts are vague and unclear. It’s harder to do when you know what you’re giving up. Staff need to be very clear when they return with a response about what work will go undone. Council needs to make a clear choice, not hide behind a nebulous unknown cut that will depend on what positions end up empty. We need to make a deliberate choice, not randomly roll the dice and base what doesn’t get done on who happens to leave. We need more info on this idea.

HalifACT
Of everything on the Mayor’s list, slashing funding to HRM’s Climate Change Plan, HalifACT, is the item that I have the most concern about. Climate change is the crisis of our times. Our civilization has hit the snooze button too many times and the world’s scientists, are telling us clearly that we’re rapidly running out of time to avoid the worst impacts. The warnings are getting more and more urgent and dire. That climate change is impacting Nova Scotia is readily apparent given our warmer winters, droughts, floods, hurricanes, and wildfires. We’re already suffering from its impacts.

It’s true that we’re not going to solve climate change in HRM, but the problem is everyone on this planet in every city, province, state, and country can reach the same conclusion. If we all collectively do very little, we’re in for a world of hurt. All we can do is do our part and hope the rest of the world does likewise. That’s not a great spot to be in, but since we don’t have any global government to bind everyone, it’s all we’ve got.

HRM has committed to reduce the municipality’s emissions to zero by 2030 and to drive change in the wider community. HalifACT sets a path for the broader community to be carbon neutral by 2050, but that distance deadline shouldn’t provide any comfort. If HRM is to meet its share of the Paris commitments, we have to substantially decrease emissions over the next few years. Emissions cuts upfront give us the runway to get to 2050. This isn’t a distant deadline, it’s a very much a now problem.

In 2022, HRM implemented a Climate Action Tax. Funds from the tax go into a reserve that is used to pay for HalifACT projects. This includes electric buses and vehicles, retrofitting buildings, and adaptation projects like Shore Road in Eastern Passage. These investments have an upfront cost, but the municipality benefits over the long-term through reduced costs. HalifACT has an actual economic payback, not just an environmental one!

It’s important to know that the Climate Action Tax is already insufficient to cover HalifACT’s projects. The tax is good for four years worth of projects. The rest of HalifACT remains unfunded and, in reality, we’re likely falling behind since inflation has made everything so much more expensive. HalifACT isn’t fully funded now and the Mayor is proposing to deepen that hole by removing 1/3rd of the hard fought funding that actually does exist. This is what staff wrote about the possibility of cutting HalifACT funding in the operating budget report on February 5:

Eliminate the Climate Action Tax, reducing revenue requirements by $18 million. This
would require reconsideration or cancellation of HalifACT projects, impacting the
municipality’s climate commitments and creating long-term funding challenge

Staff aren’t wrong! There is an argument to be made though that since all of HalifACT’s projects for 2025 are funded, we could stop contributing towards the HalifACT reserve for now and instead fund future projects directly. The downside is that will mean both steeper tax increases and more debt to come if we’re serious about following through. Once again, the theme of short-term solutions versus actual fiscal prudence is clear!

So, at best, we might be able to cut the Climate Tax without an immediate 2025 impact on HalifACT projects, but Council will be setting itself up for even starker financial challenges in just a few years time when the bills start piling up. When that moment comes, what will Council do? Will we say “okay now’s the time for hard choices” or will that future Council opt for more short-term thinking? HalifACT could very easily end up, like urban forestry, an ambitious plan that was never fully committed to where we have to modify our victory conditions to call 60-70% a success and that is constantly a target for additional penny-pinching.

If something is a priority, you need to be committed to doing it, even when it’s hard. If addressing climate change was easy, we would have done it already. Climate change is the type of problem that needs an ongoing and sustained commitment. I will absolutely not support reducing the Climate Change Action Tax as it will setup HRM for not following through on HalifACT or following through at much greater cost in the future. Both are terrible options. My strong hunch is that if this proposed cut stands, it will be the beginning of not following through as that will be the path of least resistance. We’re already behind, funding is already insufficient, and this would throw us even further back. HRM’s award winning plan can’t be pretty pictures on a shelf, this issue is too important. Look up damn it!

Including HalifACT as a potential cut passed 13-4 with myself, Mancini, White, and Morse voting against.

So What’s Next?
Staff will come back with details on the Mayor’s motion and all the potential items that Council put on the budget adjustment list on March 19. I suspect it will be quite a debate! Joe Biden is often quoted when in 2008 he said “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” We’re going to find out a lot about what our new Council values very soon.