Council Update: Budget and Morris Street

Agenda July 8 (intermission!)
Agenda June 24

Council’s July 8th meeting was so jam-packed that it has spilled over two days. We ran out of time last night so will be resuming tomorrow, Thursday July 10. Here’s what we’ve considered so far, plus what happened back on June 24

Budget Reform
Council considered a staff report in response to a multi-part motion from the Mayor from back in budget deliberations. The Mayor is seeking to cut costs and diversify HRM’s revenues. Good in theory, but the devil, as always, is in the details. The problem is this, HRM’s costs are increasing, revenues aren’t keeping pace, and budgets have been squeezed for years, leaving little room to maneuver. The gap for the coming year is over $60 million, $10 million of that being a self-inflicted wound since Council opted to spend the Central Library reserve to artificially keep taxes low this year. There are also long-term pressures around capital spending as the projects that HRM needs to undertake, many of which aren’t really optional, greatly exceed HRM’s current capacity. We’re rapidly approaching a breaking point and our options are limited.

So what can we do? There are essentially five things, but, unfortunately, under closer inspection, there are really just two choices: (1) cut services and projects or (2) tell people the truth, services and projects cost money and raise taxes to pay for it. It’s not politically a great place to be, but math doesn’t care about politics! It’s just math.

Option 1, Austerity
HRM could opt to continue keeping taxes low. We’ve been very good at that. Tax rates vary greatly across the country due to varying property values, but when you look at the actual out of pocket cost to the average resident, HRM is consistently in the bottom of the pack. HRM takes less money from residents to run the municipality than most. That keeps costs low for folks, but it also shows up sometimes in the quality of services that HRM provides and residents don’t get the full benefit since Provincial taxes are higher here than in many other Provinces.

There isn’t a fat bureaucracy where cuts can happen without impacts. A few years ago, Council asked staff for options to squeeze the tax bill bill down another 2% and the list that came back was horrendous. To save that 2% would have met cutting all sorts of services that people would have noticed and would have saved the average homeowner a few dollars per month. It’s like when Rob Ford was Mayor in Toronto and promised to stop the gravy train. What was the gravy? Library hours, parks and rec programs, basic services that people depend on to make life better. You don’t do more with less, you do less with less. HRM could go the route of cutting to keep taxes low, but the results won’t be pretty and the dollars saved for the average resident will be low.

Option 2, Tax Increases
Just as popular as cuts would be tax increases. No one wants to pay more, but services cost money and the cost goes up each year due to many factors that HRM really can’t control. HRM is growing rapidly and that comes with additional extra costs for basic services, like the fire station in West Bedford that we had to proceed with sooner than anyone planned. HRM is exhausting its savings and if nothing changes will soon be running up lots of debt. It’s not politically easy, but if we’re not willing to slash and burn, than we have to be willing to tell people that services and projects cost money, and this is what is needed to ensure that we have a functioning city that’s worth living in.

Those are basically the only two choices. There are shades of grey between the two, but that’s basically it. There are three other possibilities that staff looked it, but they’re mostly fake options that won’t change the fundamental choice. The magic beans options are: (3) become more efficient (4) get help from other orders of government (5) get the Province to allow us to generate revenue in other ways.

Option 3 Efficiency:
Trying to save money by becoming more efficient isn’t a bad idea! Staff actually had a list of initiatives as part of the report that they think can save money. Not everything on the list is costed, but what was totalled $3.6 million. Sounds impressive, but it’s actually not. First, a million of that would be from extra parking revenue (a “popular” idea that could very easily be turned down by Council). Assuming for a moment that everything on the list actually happened for the coming year, $3.6 million would be enough to cover the cost of the extra RCMP officers that Council approved last year and the additional program supports for the homeless (after hours team and Day Centre). That’s it. Combing through the whole municipal organization to scrimp and squeeze nets you enough money for a few cops and homeless supports. Efficiency is still worth doing, it’s better than not saving at all, but when the municipal budget gap for one year is $60 million, it’s not going to eliminate the need for tough choices. We can’t efficiency our way out of choosing between options 1 and 2.

Option 4 Other Government Funding:
HRM is constantly chasing grant money for projects and programs from other orders of government. This has helped the municipality in many instances and isn’t insignificant. Like efficiency though, it doesn’t replace the need for tough choices. Transfers from other orders of government were 2.2% of HRM’s budget last year. With the federal government seemingly about to enter a period of cost-cutting, banking on big windfalls here seems like a pipe dream. They aren’t going to come rescue us.

Even when the other orders of government do offer funding it is always a fixed amount which means the municipality is left holding all the risk. As we’ve seen now with the bike network, Windsor Exchange, Eastern Shore Lifestyle Centre, etc, when a project goes over budget, the other orders of government don’t increase their percentages. HRM, the order of government with the least capacity, is stuck absorbing all the cost increases. Funding from other orders of government over the last several years has turned out to be quite expensive! Even on a program level, the dynamic holds. The feds and Province will often offer one-time pilots, but when the pilot ends, it’s left to the municipality to decide whether to continue the whole program cost alone. This will come due next when the Housing Accelerator wraps up in the years ahead and HRM is left with initiatives that we’ll have to decide whether to keep.

Option 5 New Revenue:
Lastly, there is the idea of HRM diversifying its revenue sources away from property taxes. HRM is very limited in what we can do here because we can only generate money from sources that the Province authorizes. Right now that means property taxes or user fees (permits, transit fares, rental fees, etc). Council has directed staff to examine our user-fee system, but make no mistake, the very same public who pays property taxes also pays user-fees. Upping user fees is no panacea and will be as popular in many instances as raising property taxes.

The staff recommendation is to engage with the Province on alternative ideas such as potentially getting a portion of HST revenue generated in HRM and capping or reducing mandatory payments for education that come out of property taxes. These are truly the magic beans option, not because they’re bad ideas, but because they have next to no political chance of happening. The Province just cut HST and income taxes and is boasting about the largest tax reduction in Nova Scotia’s history. In what world is it remotely likely that the same Provincial government will turn around and either give up revenue or make space for HRM to add additional taxes? They won’t even consider changing the assessment cap! This feels like a near zero possibility. We might as well ask for a unicorn while we were at it.

The only piece of hope that I see here is maybe the Province stops escalating the portion of property taxes that goes to education and instead starts to fund more and more of that from their own revenues. Even just capping it would be a good start! There has been discussion on this and last year the Province stopped deducting costs for affordable housing and corrections on municipal tax bills. That change was a good one, but they left the much more significant education amounts in place, presumably, because of the huge cost of giving that revenue up. In HRM alone, education deductions total over $120 million. It seems likely that if the Province stopped taking property tax revenue from HRM, they would have to do the same for the Province’s other municipalities so this would become a big ticket item for the Provincial treasury. It’s about the only real hope that I see for a significant move in the other options space, and it’s not something HRM can bank on happening.

So what we’re left with out of all of this is either your taxes are going to go up or your services will diminish and the municipality will continue to fall further and further behind on keeping up with the needs of a growing city. Pretty darn stark! Staff will complete a service review and an analysis of our existing capital projects and will return to Council in the future. Expect Council to be wrestling with this no-win situation for the next 3.5 years.

Public Participation
Council also had a good discussion around public participation during our budget deliberations. Right now, anyone in the public can show up at any budget meeting and present their views to Council. Since almost everything HRM does has some sort of budget dynamic, it really is an open-ended opportunity to present to Council. Over the years I have seen submissions made during the public participation section change and influence outcomes. Staff were proposing some significant changes though, and not for the better.

Staff wanted to condense public participation into a single meeting. This would have significantly reduced the opportunity to provide meaningful feedback. Not everyone is going to be available on whichever day is chosen. It would also come either well before, or well after Council has actually considered the department budget that the speaker wants to address. Right now, if you time it right, you can show up in the morning and speak about an issue on the same day that the relevant department is presenting to Council. That’s a profoundly powerful combination and Councillors do pick-up questions from the public that they then ask staff. Plus, it’s worth noting that councillors are human beings too. A single meeting with say 100 speakers at a certain point just becomes a marathon to get through. Keeping people’s attention for a single marathon meeting would be challenging. Council would absorb a lot less.

Public participation can take time, and the unpredictability of how many speakers might show up can be tough for staff to manage, but those are worthwhile trade-offs. The important people in this instance is the public and we shouldn’t short-change their opportunities to ask questions and influence outcomes. So I moved an amendment to kill the idea of a single meeting for public participation and, thankfully my colleagues almost entirely agreed. Everyone but the Mayor voted in favour of keeping public participation at all budget meetings.

Morris Street
Council went late into the night to talk about the future of Morris Street. We didn’t finish until 11:00 pm! You might recall that when Mayor Fillmore’s bike lane pause motion was defeated, he pivoted to ask for specific reports on Brunswick Street and Morris Street. Council opted to go ahead with Brunswick Street, but did agree to pause Morris Street for a second look. Staff dusted off previously rejected options to present to Council, which is what happened yesterday.

The Morris Street lane is controversial because there is no perfect solution. Morris is a detour route for transit when Spring Garden is closed, an emergency route for the fire department, and secondary route for truck traffic to the Port. It has older homes, some of which don’t have parking, mature trees, and it’s relatively narrow. At the same time, it is a critical street for the bike network because it joins University Avenue to Downtown. It’s a street that fills in the gaps in the bike network perfectly and it has the gentlest slopes of any of the east-west streets. It’s the perfect route for cyclists.

The original recommendation for Morris Street that was approved in 2024 by the last Council was to make the street one-way. The one-way option allows for a bi-directional protected bike lane, parking, retains the vast majority of street trees (up to four young trees potentially impacted), and one lane of vehicle traffic. Fire was okay with the planned one-way so long as it was east towards Lower Water Street and Transit agreed that they could manage as well. The Port’s concerns remain, but Morris is just one of three truck routes (Lower Water/Hollis being the primary and Barrington/Inglis being the other backup). I personally don’t think it’s reasonable that the Port can hold three streets for truck use, especially when you consider that 75% of the truck traffic will be switching to rail in the near future. Having a backup route is prudent, but a backup of a backup is asking a lot when it holds HRM back from advancing other transportation goals. Turning Morris into a one-way street isn’t perfect, but no option is. The 2024 Council approved the project as having the best overall mix of benefits versus drawbacks.

What’s changed since is the election. Our new Mayor doesn’t agree with the 2024 plan and isn’t supporting projects that would have even a minor or a perceived impact on vehicle traffic. That’s a position that will make building not just a bike network, but also bus rapid transit extremely difficult. The Mayor didn’t want to lose two-way traffic on Morris and instead wanted to proceed with staff’s proposal to restart the design and public engagement process. Fillmore indicated a preference for a one-way bike lane on Morris and a one-way bike lane in the other direction on either Brenton-Clyde or South Street.

In the Mayor’s one-way bike lane option, Morris would keep two vehicle lanes, but would either lose all of its parking or all of its trees. Staff weren’t comfortable confirming, but a lot of us suspected the two-street option would be more expensive since it would involve modifying two streets instead of just one. Importantly, a two street option would be much less direct, resulting in many cyclists likely staying on Morris Street and riding in traffic rather than using a route that is less direct with a bunch more intersections to navigate. For me that was a major factor: If we’re going to build something, we should aim to build something that gets the maximum use, not something that looks good on a map, costs a bunch of money, but is actually not that useful! Morris Street also has a school on it and if we’re serious about providing kids with safety and independence, it’s the kind of spot where protected safe infrastructure should go.

The area Councilllor, Laura White, has spent a lot of time agonizing over this issue over the last few weeks. I appreciate her due diligence and passion. What she eventually asked Council for was to defeat the motion to start over and instead stick to the original University Avenue/Morris Street plan, but implement the Morris Street portion as a tactical project so that HRM can evaluate how it actually performs before committing to permanent infrastructure. In the end, the Mayor’s motion failed 4-13 with Fillmore, Purdy, Gillis, and Young voting to start over. Councillor White’s motion was then approved with the same split, 13-4. So Morris Street is back on again.

Other:

• Voted to continue work on the Windsor Street Exchange Project including options for future phases that would provide more transit priority
• Requested a staff report on private road maintenance (HRM applies area rates for various associations to create a mandatory way for people to collectively pay for their roads)
• Also requested staff reports on the cost of the AAA bike network,
• Approved receiving a presentation from staff on the latest point-in-time count (count of people experiencing homelessness)
• Approved substantial alterations to a registered heritage property, the Musquodoboit Railway Museum, to allow the preserved section of tracks to be shortened to accommodate a new road
• Entered into a less than market value lease with the Province for a number of co-op housing properties in the North End of Halifax that were leased by the former City of Halifax for 40 years back in the 1980s
• Approved grants for the rural transit and community grants programs
• Created a new residential permit parking rate system in which rates will increase by vehicle size
• Approved revisions that were mostly house-keeping in nature for the licensing bylaw for construction and demolition waste disposal sites, the affordable housing grant program, and the streets bylaw
• Revised the public participation administrative order for public participation in planning decisions to formally include neighbouring municipalities
• Enacted revisions to the affordable housing grant program
• Approved a list of new street names
• Received presentations from Events East and Discover Halifax and approved their respective plans
• Received presentations on the Robie Street transit project and on the Board of Police Commissioners workplan
• Grudgingly accepted the staff recommendation to not adopt a vehicle noise bylaw and will instead have tough conversations about resourcing the traffic unit to enforce what is already enforceable
• Deferred discussion of the Wanderer’s Block plan to a future Council meeting
• Submitted a resolution to the Canadian Federation of Municipalities advocating for a national program on firefighter cancer screening
• Rejected a site plan approval for the controversial construction and demolition waste disposal site in Lake Echo
• Held a public hearing to formally close a street, Ryan’s Gate, in Dartmouth North
• Approved adding an additional floor to a development at 174 Main Street in Dartmouth
• Entered into an agreement with the United Way to operate a neighbour mediation program
• Approved amendments to the rural sidewalk administrative order for the East Preston project
• Approved substantial alterations to 5492 Inglis Street, a registered heritage property
• Scheduled a public hearing to consider adding 2316 Maynard Street to the registry of heritage properties