HRM’s Budget: a race to the bottom on property tax rates hurts our community

A race to the bottom on property tax rates can be politically appealing, but it can also be deeply damaging to residents and to the long-term health of our community. While the promise of the lowest tax rate may sound like a clear win for homeowners and businesses, an excessive focus on minimizing property taxes weakens the very services and infrastructure that make a municipality livable, safe, and prosperous, particularly when in HRM, tax rates occupy such a significant portion of the revenue the municipality has to deliver services and invest in the future. Put simply, the lowest possible tax rate can’t be our singular focus – as a Council or as residents.

Property taxes are the primary revenue source for HRM. Unlike our federal or provincial government, we have limited ways to raise revenue. This leaves property taxes to fund a wide range of essential services and assets that residents rely on every day. Roads, sidewalks, bridges, snow clearing, waste collection, parks, libraries, police, recreation facilities, fire services, land planning, bylaw enforcement, and public transit are all supported through property tax revenues, with just a bit of cost recovery included in the limited fees the municipality brings in. Municipal services are not luxuries; they are core components of daily life and community well-being. So that reveals the big asterisk that should accompany the discussion: we should pursue the lowest reasonable, responsible and sustainable tax rate as opposed to the rock-bottom lowest. As I concluded in my remarks prior to the vote on the 2026/27 budget, it’s about a fair tax rate, not the lowest tax rate.

Government is meant to be an instrument of collective good. We have a social contract. We place trust in government of all levels to do what is right and fair and helps better the lives of the people they serve. And this is done with residents paying taxes of various forms to provide the levels of government with the revenue needed to effect these results. The outcomes delivered by the municipal government in HRM are felt in every day ways. We drive on our streets, walk on our sidewalks and in our parks, put our garbage out on garbage day, call the police or fire department in times of emergency, experience congestion at peak hours on our way to or from work, enjoy time at a local recreation center, take part in a public event – the list goes on.

It’s natural that our tax bill becomes a point of contention. Nobody wants to pay more. I know I don’t. But if that increase means I get the things I need and want and my life is made better and more affordable, then it’s worth it. That worth is subjective based on each residents’ circumstances. I totally understand that. One of the reasons I asked residents for their trust to do this job was to work to ensure that residents get the value they seek from our local government – the instrument of that collective good. It’s hard work, especially when it comes time to talk about the budget.

Ice Cream or Broccoli?

Asking people whether they would like lower or higher tax rates is a bit like asking your kid whether they would like ice cream or broccoli for dessert. You know the answer before you ask the question. It’s not a fair question. The lowest rate possible, without further context or discussion, can’t be the only message you hear from leaders – because they know they’re asking whether you want ice cream. Of course you do. Who wouldn’t? But what if the question was positioned a bit differently. What if it was “would you like to have a smaller scoop of ice cream on top of a tiny piece of broccoli, AND everyone you know gets to have the same thing too and they will know you made that choice for their benefit?”

Pursuing the lowest property tax rate, we would face difficult trade-offs. When revenues are constrained while costs continue to rise, something must give. We’ve been in that position for a while now – everyone is feeling the pinch with the cost of groceries, electricity, water, construction materials, services – just about everything has gone up in recent years. Some more so than others. Coming out of COVID, everyone noted the “shrinkflation” occurring in multiple areas. You cost may not have gone up, but what you got in return for your money went down. Viewed through the municipal lens, this can mean service reductions, delayed projects, or deferred maintenance on infrastructure. While these decisions may allow a municipality to maintain a low tax rate in the short term, the long-term consequences can be significant. An important question to ask is what would you be willing to give up? And what impact would it have not just on your but the people around you? What about people in the rest of the municipality? What about vulnerable populations?

Defer now, pay later

Deferred infrastructure maintenance is one of the most serious risks associated with a race to the bottom on tax rates. Municipal infrastructure—such as roads, water systems, arenas, community centres, and public buildings—has a lifecycle that requires regular upkeep and eventual replacement. If necessary repairs are postponed year after year in order to keep taxes low, the condition of these assets gradually deteriorates. Small maintenance issues can turn into major failures, forcing municipalities to undertake costly emergency repairs or full replacements.

The Halifax Forum is certainly the best and most visible example of this. Deferred maintenance coupled with deferred decisions on its replacement, going back to 2014 (earlier when it comes to maintenance) are the reason the building just can’t operate safely much longer. And now the cost of replacing it is almost 3 times what it had been estimated originally.

In many cases, this creates a cycle where residents eventually face steep tax increases to address years of underinvestment – sounds familiar right? What may have seemed like responsible tax restraint in the short term is now very much resulting in higher costs in the long run. Paying a little more each year to maintain infrastructure properly is often far less expensive than waiting until assets reach the point of failure. Our operational and capital planning, and our operational reserves all play a role in smoothing out this impact over the long term, and this council is taking corrective action to balance the short and long term needs of residents, prioritizing maintenance while still accommodating growth strategically in the municipality.

The lower the rate, the less responsive to growth we can be

The pursuit of the lowest tax rate can also limit a municipality’s ability to plan effectively for growth. Communities evolve over time as populations increase, demographics change, and economic activity expands. Boy have we ever experienced that in HRM. We feel it every day, particularly in the congestion we now feel in our roads. To be sure, growth brings opportunities, but it also requires investment in infrastructure and services. Growth demands new roads, parks, schools, recreation facilities, and transportation options. If we focus primarily on keeping taxes as low as possible, we’ll struggle to make the proactive investments needed to support healthy growth. Especially since infrastructure investments take much longer to realize than it takes for more residents to arrive in HRM.

So what are we seeing as a result of our growth without reserves to power infrastructure investment? Overcrowded recreational facilities, congested roads, insufficient public transit, and aging community spaces – some that are struggling to meet the needs of residents. I don’t want to see our quality of life suffer, and it’s disheartening to see the understandable frustration among residents who feel that local services are falling behind.

The value of your tax dollar is determined by your perception of the quality of service you receive

Extremely low tax rates gradually erode service quality. Municipal services are often the most visible form of government that residents interact with well-maintained parks, vibrant libraries, reliable snow clearing, clean streets, and accessible recreation programs contribute directly to residents’ daily experiences. They create places where people gather, stay active, and build connections with their neighbours.

When budgets are tightly constrained in order to maintain the lowest tax rate, these services are often among the first areas to be reduced. Recreation programs may be cut back, park maintenance may be delayed, library hours may shrink, and our facilities may struggle to keep up with demand. We might choose to cut back on hiring or even reduce staff, with these same impacts occurring more broadly, or even actually within certain municipal services. While each individual reduction may seem small, the cumulative effect can significantly diminish the character and livability of a community. Residents often don’t appreciate the value of a service they receive until it’s gone. And it can be a long road to bring it back.

Lowest tax rate can undermine quality of life, economy, and be less attractive for investment

Ironically, a municipality that focuses heavily on maintaining the lowest tax rate may not actually become more attractive to residents or businesses. Many people choose where to live based on quality-of-life factors rather than simply the tax bill. Families often look for communities with good recreational opportunities, safe streets, accessible public services, and well-maintained infrastructure. Businesses similarly value locations that provide reliable transportation networks, attractive public spaces, and strong local amenities that help attract employees.

If we underinvest in these areas in pursuit of the lowest possible tax rate, we’ll have a hard time competing with other municipalities that maintain stronger infrastructure and services. In the long run, HRM’s economic vitality depends on our ability to provide a high quality of life.

Unsustainable rates lead to bad decision-making

A race to the bottom on property taxes can also distort public debate and decision-making. Instead of focusing on what level of services residents want and what investments are necessary to sustain the community’s future, discussions can become dominated by comparisons of tax rates between municipalities. Political pressure may encourage short-term decisions that prioritize optics over long-term sustainability.

This dynamic can make it more difficult for elected officials to engage in honest conversations about the true costs of maintaining infrastructure and delivering services. Responsible governance requires careful long-term planning, but a constant emphasis on keeping taxes lower than neighbouring communities can discourage that kind of forward-looking approach.

Lowest tax can mean higher costs for everyday living

It is also important to recognize that property taxes are only one part of a household’s overall cost of living. If a resident pays slightly lower taxes they may face higher transportation costs, fewer services, or reduced access to amenities. In many cases, residents ultimately benefit more from well-funded municipal services than they would from marginally lower tax bills.

Did Council cut everything it could?

Part 4 of my series, we had started with a 10.5% increase based on considerable direction from Council to hold the line on expenses. Over the course of our months of debate, and the debate of items moved to the Budget Adjustment List for even more debate, the rate actually got as low as 7.5% according to our ticker. But as I believe I have pointed out in this article, the lowest possible rate can’t be our only goal. Treading water doesn’t make residents’ lives any better, and we’ve been treading water for so long, that’s what residents have come to expect – or worse, they expect services to continue to degrade, which then makes every budget period that much more contentious.

So if, based on our analysis, we could make some investments to do make some progress – to make lives better and more affordable for residents, where could we do so? We did make some progress, knowing that it would sacrifice some of the ground we had made up on the tax rate. Some highlights of what came out of this year’s budget:

• enhancing Halifax Transit service by adding 10 articulated buses and 24 bus Operators to fast-track the Core Service Plan;
• enhancing community safety by adding 10 firefighters and eight Emergency Response Communicators;
• improving road safety through implementation of the municipality’s Road Safety Program and public education campaign;  and public education campaign;
• demonstrating fiscal responsibility through saving for capital projects, lowering debt servicing costs and decreasing municipal pension contributions;
• supporting and strengthening vulnerable communities through key partnerships, like the African Nova Scotian Road to Economic Prosperity and tax relief to non-profit organizations;
• reducing environmental impacts by eliminating paper voting ballots and printed Halifax Transit Riders’ Guides and Route Maps;
• introducing revenue generating measures like paid parking on Saturdays, parking fee increases and a $0.25 transit fare increase.; and,
• strengthening long-term fiscal sustainability by approving reserve funding in accordance with the municipality’s Reserve Funding Strategy and establishing debt guardrails to maintain debt servicing costs at or below 12 per cent of municipal revenues.

That last one is particularly important because projections based on where we had been going had tax rates continuing to rise substantially as major projects “matured” and wound up impacting the tax rate. While there will still be impacts, we smoothed the impacts by putting more aside to help pay for those bigger projects now and over the next few years, and we set a debt maximum of 12% of operating to keep this and future councils accountable for the debt-driven projects they take on.

Additionally, in 2026/27, the Halifax Regional Municipality will complete two important projects designed to alleviate financial pressures facing the municipality: the Corporate User Fee Strategy and the Municipal Service Review.

• The Corporate User Fee Policy and Strategy will help the municipality set service fees in a fair, clear and consistent way. It will also help the municipality stay financially stable over time. Each business unit will review the fees it charges. Staff will then bring suggestions for fee changes to Council. Council will decide whether to approve, change or reject each suggestion.
• The Municipal Service Review will look closely at the services and programs the municipality provides to identify where services could be delivered differently, and where improvements could be made. This is expected to achieve sustainable savings going forward.

I also anticipate other cost-saving sustainability-focused measures to come before council to effect change on future budgets. The Mayor already gave a notice of motion at the close of yesterday’s council meeting that he will again ask for the next budget to be crafted with a “hold expenses flat, adjusting only for inflation and contract obligations” approach, exactly what was done to lead of this budget season. And as I mentioned in Part 4 of my series, I expect the Mayor’s initial motion for a review of overall HRM staffing will come back and will be worth a look when enough time can reasonably be applied to undertake a thoughtful analysis, intersecting with the Municipal Service Review and whatever our not-yet-hired new CAO may seek to improve.