'A bitter pill': Newmarket weighs bigger infrastructure tax increase

'Our reserves are below the levels needed to maintain infrastructure,' says town official; an additional 0.5% tax rate increase for 24 years would bridge gap

Newmarkettoday.ca
Oct. 3, 2023
Joseph Quigley

The Town of Newmarket is bracing to spend more to fix degrading assets and possibly increase the annual property tax rate by 0.5 per cent to do so.

Council heard today that to address the impact left by two years of rapid inflation in construction prices, an extra tax bump increase would likely be necessary, in addition to the one per cent annual increase the town already dedicates to the asset replacement fund.

Without action, staff projected roads and infrastructure could degrade. At current budget over the next 10 years, staff project town infrastructure in poor or worse condition would go from 16 per cent to 28 per cent in ratings.

“I can’t tell you how much I enjoy a bitter pill first thing Monday morning,” Deputy Mayor Tom Vegh said of the possible tax rate increase.

The proposed increase would be for 24 years to “catch up” with a gap in reserve funding for asset replacement costs. Council has yet to approve any tax rate increases, but staff will recommend the bump in the next budget.

During the council workshop, staff detailed the state of municipal infrastructure and asset reserves. Due to a rapid rise in inflation over the pandemic, especially for construction, the town’s outlook on addressing infrastructure funding without a greater rate of funding has worsened.

“Our reserves are below the levels needed to maintain infrastructure, and our aging infrastructure will increase capital needs over the next 10 years,” manager of corporate asset management Lisa Ellis said, adding that ramping up infrastructure funding to meet the need “will be a challenge. We really need a plan in order to do this.”

The extra 0.5 added tax rate increase annually would bridge that gap, treasurer Mike Mayes said, and staff plans to still keep the overall tax rate increase at below three per cent for 2024. But that 0.5 per cent boost would not address the potential impacts of climate change, for which staff propose to start planning. It also does not address the possible impacts of Bill 23 reducing development charges.

Councillor Christina Bisanz said staff make a compelling case to build up reserves.

“We’ve been very conscious in the last go-round of the budget to make sure we’re respectful of the challenges residents are facing at this point in time in the economy,” Bisanz said. “You’ve made a very compelling case about why we need to keep up our assets. But of course, it always comes down to how we fund it.”