The City of Winnipeg is planning for balanced books this year thanks in part to a 2.3 per cent property tax increase, an increase in fees and pulling money from the city’s stabilization reserve fund.

The preliminary operating budget for the City of Winnipeg was tabled Tuesday afternoon, and members of the city’s executive policy committee got a chance to see how the city plans balance its books despite having expenses that reach higher than its revenues.

“What we have acknowledged is that we came into a $79 million shortfall and that was something. The enormity was a surprise to all of us, and we were left making some difficult choices,” said Mayor Brian Bowman.

Budget highlights

Property tax hike will cost average homeowner an extra $37 per year

Majority of 2.3 per cent hike will go to fixing roads

Frontage levy fees are going up an extra $30 per year for average homeowner

About 6,000 small businesses will get rebate on city business taxes

Arts funding up from $5 per capita to $7 per capita over next two years

About $300,000 earmarked for a downtown dog park

City forecasting deficits for 2016 and 2017

Fare increase of five cents coming in 2016 to help with Rapid Transit

Water bills going up by $10 per quarter starting in 2016

The answer was a mish-mash of measures, including the first of what will likely be numerous property tax hikes in coming years.

This year’s 2.3 per cent increase will mean an average of about $37 more per year for the average Winnipeg homeowner with a house worth $260,000.

As for where the money will go, the 2.3 per cent increase will fund streets — one per cent each is going to regional and local street renewal programs — that includes back lanes and sidewalks.

“Winnipeggers were very clear during the campaign that the number one priority was to fix the roads,” Bowman told the press following the budget being tabled.

The leftover 0.3 per cent will be funnelled into the city’s operating budget.

City officials said past reliance on one-time revenues and deferral spending isn’t sustainable, and now, the city's revenues don’t cover expenditures.

That means not only taxes but fees will also being going up — the frontage levy is going up from $3.75 per foot to $4.35.

That translates to an extra $30 per year on a 50 foot lot. The city is hoping to raise $6.7 million from that fee hike.

The city is also raising a bit of money by sucking cash out of the stabilization reserve fund — a cushion the city uses for deficits.

It's pulling out a $4.2 million surplus in the fund and plans to take more out in the coming years.

Until now, that fund had to be at eight per cent (about $969 million), but the city is planning to lower that to six per cent and take about $5 million out per year to help balance the books.

City officials said it was a difficult choice made under difficult circumstances, and pointed to other major cities that have lower floors. Both Calgary and Edmonton have five per cent floors for their reserve funds.

“What I would take away from this budget is the fact that 14 years of property tax cuts and freezes has put us in a very difficult position. It’s resulted in deferred maintenance and deferred investments that we now have to catch up," said Bowman. "I’m not suggesting this solves everything because, as Coun. Morantz has pointed out, there is a structural deficit that’s growing.”

Bowman had committed to finding about $9 million in operating efficiencies in 2015 but came up short. Instead, there were about $6.5 million in operating efficiencies in this year’s budget.

There was much speculation about closing city pools, and the city’s budget does call for reducing city pool hours to save $115,000 this year and $300,000 in 2016-2017.

Where is the city spending more?

In terms of where the city will be spending more, there’s a brand new $1 million innovation capital fund to finance “new ideas” for efficiencies, service delivery improvements and accountability at the city.

The city will also be raising less revenue from businesses, with a cut in business tax from 5.7 per cent to 5.6 per cent and a new rebate for small businesses.

Businesses with a rental value of $30,000 or less will get a rebate on their municipal business tax. That $30,000 mark means almost half of all of the city’s 12,000 businesses will be exempt from business tax.

The Winnipeg Police Service got a modest increase of $5 million to bring its total budget to $264 million. The Fire Paramedic Service got an extra $10.5 million, bringing its total for 2015 to $178.3 million.

There’s also an increase in funding for the arts — upping the per capita funding from $5 to $7 over the next two years.

In addition, $300,000 was earmarked for a downtown dog park, as promised by Bowman during his campaign last year.

Bowman also made good on a promise to start an annual grant of $150,000 to the United Way’s plan to end homelessness.

The city’s executive policy committee approved the budget Tuesday afternoon. Next, it will go before a full vote at city council.

Before then, though, Bowman is encouraging any Winnipeggers who are happy or unhappy with the preliminary budget to speak out.

“I would encourage all Winnipeggers to review these budget documents. I would encourage them to let their voice be heard about what they like and what they don’t like in this budget," he said. "There will be a process where we’re inviting ongoing dialogue not just with council but with Winnipeggers.”​

Deficits, fee increases forecast for future years

The city was facing an operating deficit going into the budget, meaning it was spending more than it was making. The mayor planned to balance the books with this year’s budget, but admitted there are going to be serious issues in years ahead.

In 2016, there’s a forecast deficit of $73.4 million, and in 2017, that number jumps to $115.2 million.

Fees will go up for a number of services next year — including Winnipeg Transit fares and a $10 increase per quarter on water bills for the average water user.

Rapid Transit funding plan

The city is moving forward with plans to build the next leg of Rapid Transit in Winnipeg by building the southwest transitway.

The budget revealed plans to pay for it through a 0.33 per cent property increase starting in 2016 and running for 10 years. Whether or not that will be in addition to planned increases tied to inflation, officials wouldn’t say.

The city is also planning a one-time, five cent fare increase for transit users in 2016, over and above any regular fare increases from Winnipeg Transit, but the province will have to approve that before it becomes a reality.

The province and feds are also expected to kick in for the project.

Six-year capital investment plan

The city unveiled a six-year plan to invest in $2.9 billion in capital projects — upping previous year’s commitments by nearly eight per cent.

Most of the cash will go to sewage projects, while the remaining funds will go to roads, bridges, water systems, transit and public safety infrastructure.

Community facilities like pools and arenas will also get some of that cash, followed by libraries, drainage systems, flood control, active transportation facilities and waste disposal.