On January 12, 2023, Riley Burton, Immediate Past Chair, and Charla Robinson, President, made a deputation to City Council to outline the Chamber Membership’s views on the proposed municipal budget.
The text of that deputation is below.
I am happy to highlight progress that has been made in recent years – the long-awaited introduction of a parking app that simplifies parking meter payments in our business cores; annual adjustments of tax ratios to align with provincially set range of fairness thresholds for multi-residential, commercial and industrial class properties; and the adoption of the game-changing new zoning by-law are just a few examples of the work that has been done by Council and administration to address long-standing areas of concern. Digitization of services in the building department are underway and we eagerly await its implementation. However, the pace of change and innovation within the administration of the city continues to lag and there is much more work required to become the kind of innovative and robust city that is essential to a thriving economic climate.
We know that the budget decisions in front of you are incredibly challenging. In order to reduce operating costs and build resiliency, there are hard choices to be made that will not be popular with everyone. Significant changes are necessary to ensure that our city becomes more affordable for current residents and businesses, more attractive for new arrivals, and to provide flexibility to address future disruptions.
We recently surveyed Chamber Members for input into the 2023 city budget. The responses received clearly indicated that businesses do not support the budget as it is proposed. Our Members are looking for a maximum 3% tax levy increase and an increase to the tax funded capital budget of $1.3 million dollars.
As you consider the total tax levy increase, please remember two basics of how the tax levy is applied to businesses:
- under current tax ratios every dollar charged to residential taxpayers amounts to $2.04 for commercial taxpayers, $2.37 to industrial taxpayers, and $2.85 for large industrial taxpayers; also
- Commercial and industrial property assessment values are much higher than those for residents. Commercial and industrial buildings are typically bigger than houses and they cost more so while a residential home might be valued at $250,000, a commercial building is likely at least 2 times that amount and often much much higher.
As referenced by the City Treasurer on Tuesday, the 2022 BMA Survey shows that the majority of the commercial and industrial tax classes in Thunder Bay are classified as having “high” taxes when evaluated against other municipalities over 100,000 residents and only the motel and large industrial classes are identified as having “mid” or average tax burden.
I’d like to share some insights about the business environment in which this budget is being evaluated. The past 3 years have been exceptionally difficult for many local businesses. Government mandated shutdowns and capacity restrictions through 2020, 2021 and 2022 resulted in lost revenues and unprecedented debt levels for many businesses from which it will take many years to recover. Dozens of businesses have already closed and many more are studying their financial statements each month as they try to keep their doors open.
In addition to the lingering effects of COVID, operations are struggling under the growing weight of new challenges. Ongoing supply chain slowdowns mean many businesses are placing orders months earlier and seeking new suppliers in the hopes that they can balance inventories effectively to meet the needs of their customers. Sometimes the orders come quickly; however, with some products the delays are so long that businesses aren’t receiving their stock until it’s out of season, leaving the owner on the hook for the costs of products that they can’t sell.
Labour shortages are also continuing, leading to long hours for operators as they juggle their own tasks as well as the jobs they can’t fill. Labour costs are also rising as wages increase due to inflation.
Record high inflation is being felt in every business and household. Restaurants and hospitality establishments, which weathered some of the worst impacts during COVID, are now seeing increased food costs of 35% and higher with some specific items such as flour and eggs at approximately 50% increased prices from the year before. Charitable organizations are also feeling the pinch as individuals and businesses reduce the number and dollar values of donations, coupled with record high usage of their services.
There are valuable lessons in the way these businesses are adapting in order to manage price increases to their customers by:
- reducing staffing and realigning departments;
- adjusting benefit programs through health savings plans;
- investing in technology to streamline processes for hiring & HR activities, sales processing, expense approvals, fleet management, and work allocation;
- reducing building space requirements thru hybrid working and file digitization.
- leasing instead of buying equipment;
- investing in energy efficient lighting, refrigeration, cooling & heating systems;
- the list goes on….
In short, no stone goes unturned to reduce operating costs while ensuring that investments in capital requirements are a priority.
Successful business owners look for the opportunity in uncertainty…and embrace an attitude of constant improvement…and they expect the same approach from their municipal government.
We understand that our request will require significant operating spending cuts and encourage you to move forward with prudent service level reductions should they be required. As the Board of Directors for this Corporation, we would discourage the temptation to step into the role of management as that is not an effective governance practice. What we strongly recommend is that you provide clear direction to City administration to bring back a new proposed budget that addresses the business community’s ask to increase capital investment by $1.3 million dollars while not exceeding a 3% tax levy rise.
Thank you for your time and attention.