Mayor raises revenues to new heights – Winnipeg Free Press

Opinion

It wasn't the sexiest private road item in the City of Winnipeg's 2024 operating budget, but it might have been the most effective.

The budget proposes to increase the lodging tax on every hotel, motel and short-term rental in the city from five percent to six percent. For the first time, the extra money will go into general revenue rather than a special fund to support Winnipeg's economic development, the Winnipeg Convention Center and other events and organizations that promote Winnipeg tourism.

City officials didn't know how much it would bring in in its first year, but it could be in the millions of dollars.

Why is this one measure so important?

While modest in impact and expected revenue, it's one of the few signs in the budget that the city is getting bolder when it comes to identifying new revenue streams to reduce its reliance on property taxes.

The same motivations were behind another decision in this year's budget to ask the provincial government to allow private phone lines (landlines and wireless) to charge $1 a month to support the rapidly rising cost of 911 services.

The measure — which is poised for approval by the NDP government and is widely used in at least seven other provinces — is expected to cost $7 million to cover the costs of operating 911 call centers and dispatch services.

These two budget measures represent significant changes in strategy. In the past, the city has focused on raising property tax rates and raising fees for specific services.

Mayor Scott Gillingham said he has spoken with Premier Webb Kenew to find new revenue sources and ease the city's reliance on property taxes.

“This is part of a conversation I'm having with the province of Manitoba about a new funding model and the ability for the city to identify new revenue streams,” Gillingham said.

When Gillingham ran for mayor in 2022, he campaigned to find a new funding model without defining exactly what that would mean. Often, he still does not reach out for a suitable solution.

Earlier discussions have touched on giving municipalities an allocated share of provincial sales tax revenue. Former Mayor Brian Bowman tried to introduce a development fee, but his approach failed to withstand a legal challenge from developers. Other voices suggested Winnipeg should take a page from the revenue-strategy books of big cities in the United States and consider a separate municipal sales tax.

No wonder these ideas fail.

The city currently has the legal right to tax things like alcohol sales, but it hasn't had the courage to go that route.

In addition, to create a separate municipal sales tax, the city must seek approval from the provincial government to amend the City of Winnipeg's charter, which is an act of the Manitoba legislature. So far, provincial governments across the region have ignored calls for new taxes for fear of sharing the political blow.

However, there are signs that the political landscape has changed.

First, municipalities have endured seven years of austerity at the hands of the recently defeated Progressive Conservative government. Without proper explanation, the Tories ended operating grants to municipalities, forcing many of them to rely on property tax and levy hikes.

While the details won't be known until the Kinyu government prepares its budget next month, Gillingham expects the city to see a 2.5 per cent increase in provincial grants, which would translate into a modest increase of $3.4 million.

While this is appreciated, Gillingham said it is not enough to support the rising cost of providing civic services.

Gillingham is walking a fine line in this year's budget, which some have criticized as being too focused on the revenue side of the equation. Along with the housing tax and new 911 fee, the city will raise property taxes by 3.5 percent and increase all other fees (minus upfront fees) by an average of five percent.

Unless Gillingham can show Winnipeggers a significant dividend from these increases, he will surely lose the political traction to argue for more taxes. To that end, this year's budget includes longer hours at libraries, more new sprinkler surfaces and improvements ranging from rapid transit and active transportation to urban reforestation.

Again, these line items may seem trivial. When grouped together, it's a powerful effort to show Winnipeggers what they can get for their tax and fee dollars.

Will all this give Gillingham a chance to come up with a new funding model for the province?

With a relatively new mayor and a new provincial government, the timing seems right.

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Dan Lett
Appraiser

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year after graduating from journalism school, with dreams of becoming a newspaper reporter.

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