Finance Committee Recommends Tax Cut

Saint John is taking the first steps to lower its tax rate by 1.5 cents — the first decrease in more than a decade.

Finance committee members voted Thursday to set aside $1 million in the city’s Tax Rate Reduction Reserve.

The city received the extra revenue after the province moved to eliminate the property assessment gap, known as P-Gap.

Provincial officials established the gap in 2013 following a three per cent cap on residential assessment hikes in 2011 and 2012. It was meant to gradually return property values to their true market value.

If approved by council, the 1.5-cent tax reduction would lower the city’s tax rate to $1.77 per $100 of property tax assessment.

“If I were to summarize what I’m about to say, it would be yipee,” Coun. Gary Sullivan said during Thursday’s meeting. “We haven’t had a tax rate change since 2009 when council of the day lowered the tax rate by a penny.”

Sullivan said council has had great success since then not raising the tax rate given the number of pressures the city has faced in recent years.

Council first discussed the need to reduce the tax rate more than four years ago, but the city’s finance commissioner cautioned against it.

“Quite frankly, we weren’t ready,” Kevin Fudge said. “The city’s finances weren’t stable.”

Since that time, the city has implemented a long-term financial plan, eliminated its structural deficit, reduced its debt and increased its reserves, among other things.

“That’s culminated with shifting from managing our finances on a year-to-year basis to looking at our finances through a 10-year lens on a financial plan with those targets, one of those targets being to reduce the tax rate,” said Fudge.

“Four-and-a-half years later, we are ready to take our first step to reducing the tax rate component of this plan.”

Coun. Donna Reardon said she supports the move but does have some reservations.

“We’ve only got 160 of those million-dollar cheques that we can write or put here or there, so we’ve got to use them so strategically,” said Reardon. “Reducing the tax rate is good, I’m not sure what the return on our investment is with that.”

City manager John Collin said lowering the tax rate would benefit the city in many ways and send the message that they are open for growth.