HALIFAX—Just as the mayor warned earlier this week, municipal finance staff are recommending property taxes go up.

In a report to Halifax regional council’s committee of the whole, which is meeting Tuesday morning, staff recommend moving ahead with the budget process considering two scenarios: one in which average residential and commercial property tax bills rise by 2.1 per cent and one in which they rise by 2.9 per cent.

During his seventh annual state-of-the-municipality speech to the Halifax Chamber of Commerce on Thursday, Mayor Mike Savage said there were “tough budget debates” to come. The chamber had asked that the municipality not raise property taxes again for the coming year.

Savage told reporters afterward he didn’t think it was possible to “hold the line completely” on taxes.

The staff report on the municipality’s “fiscal framework,” written by financial policy and planning manager Bruce Fisher, backs him up.

Based on what Fisher calls a “base case scenario,” a financial forecast model developed by staff, the report warns that if taxes remained flat, Halifax would face a $15-million budget gap next year, ballooning to $48 million in four years.

“The growth in tax revenues is considerably less than the expected cost of services,” Fisher writes.

New or adjusted services approved by council, like more RCMP officers for the suburban and rural parts of the municipality and increased ferry service, account for $7.9 million of those increased costs.

The report says there’s also $15 million worth of increased wage pressures from unionized police, fire and transit employees, $3 million in extra fuel costs and the continued impact of low commercial assessments due to high commercial vacancy rates.

“While efficiencies, cost improvements and re-prioritizations are to be expected, they are unlikely to offset the rising cost pressures in many services,” the report says.

To offset those pressures, the report says that taxes, which bring in 80 per cent of Halifax’s revenue, should rise by 2.9 per cent in fiscal 2019-2020 and 2.2 per cent in fiscal 2020-2021.

“These changes are slightly higher than inflation ... but comparable to personal income growth,” the report says.

Those increases represent $56 on the average residential property tax bill, which is currently $1,917, in the first year and $44 in the second.

And they don’t account for any more spending.

“In themselves, these rate changes would not allow for additional service expansion above that already approved by regional council,” the report says.

Though the staff recommendation includes two scenarios (a hike of 2.1 per cent and a hike of 2.9 per cent), the report only considers 2.9 per cent.

That recommendation also includes a commensurate hike to the average commercial tax bill, but the report doesn’t say what that would entail in dollar figures.

On Thursday, Savage told reporters he expected council to push back on the recommended property tax hike.

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“My own sense is that there will be a push from council to say, if we’re being asked to increase by 3 per cent, ‘What is it going to look like for us to get to 1.5 or 2 per cent or 1 per cent?’ I know council’s going to want to consider that,” he said.

During last year’s budget debate, Halifax regional council approved a 1.975 per cent increase to the average residential tax bill and a 1.1 per cent decrease to the average commercial tax bill.

After Tuesday’s fiscal framework vote, budget talks begin in earnest in December and last through to early April, when council will approve the fiscal 2019-2020 budget.

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