Explained: How can Winnipeg council deal with a $7B infrastructure deficit?

By Tyler Searle

A $6.9 billion infrastructure deficit plagues the City of Winnipeg, and municipal taxpayers will likely have to open their own wallets to bail it out.

Infrastructure is a catch-all term describing things like roads, bridges, and sewer systems. The deficit is the budgetary difference between money the city can spend on these services and what it needs to spend to maintain them.

Infrastructure forms the skeleton and connective tissue of every community—it offers an indication of a city’s financial health.

In Winnipeg, the diagnosis is grim. The city has brittle bones, and its muscles are beginning to atrophy.

Evidence of its budgetary shortcomings afflicts the city on almost every corner. Pockmarked roads, ramshackle buildings, deteriorating bridges, and an overwhelmed wastewater system (that frequently dumps millions of litres of contaminated fluids into local waterways) are lingering symptoms of the deficit.

The city’s power to raise money is limited because most of its revenue comes from property taxes, utility fees, and user fees. Increasing these generates more money, but there are limits to how much taxpayers can afford to shell out.

Problems brewing for decades

Municipalities across Canada suffer infrastructure deficits, but Winnipeg’s wounds are somewhat self-inflicted, said Dr. Aaron Moore, an associate professor in the Department of Political Science at the University of Winnipeg.

The trouble has been brewing since the late 1980s, when recession burdened the nation. At the time, provincial governments cut financial supports for municipalities, he explained.

Some cities offset the expense by increasing property taxes, but Winnipeg politicians, unwilling to face the ire of angry taxpayers, chose not to, Moore said.

The practice passed on from council to council. For roughly a decade, property tax remained static.

“If you don’t raise the taxes… you’re not increasing your revenue even though you have inflation in all of your costs,” he said. “We’re talking about lack of maintenance for decades, so the cost of actually fixing everything is much higher than it would’ve been.”

When Mayor Brian Bowman took over as mayor from Sam Katz in 2014, he attempted to stop the bleeding by implementing an annual property tax hike of 2.33 per cent. The change, although a step in the right direction, is not enough, Moore said.

Winnipeg needs to generate significantly more revenue to overcome the deficit in the coming decades. This fact is not unknown to the city council, as evidenced on page 15 of the 2018 State of the Infrastructure Report, which plainly reads, “The City’s current funding model is not sustainable.” 

Other Prairie cities collect, on average, 44 per cent more revenue per capita compared to Winnipeg. Since 1998, Edmonton, Calgary, Saskatoon, Vancouver, and Regina have roughly doubled their property taxes. Winnipeg has seen an increase of only nine per cent, the report reads.

The document outlines vague a plan to correct the deficit by reviewing assets, developing levels of service, and increasing access to revenue, but offers no concrete examples of what these terms mean.

Moore translates reality into simple language.

“There isn’t much else the city can do. They either need to generate more revenue or cut,” he said. 

If taxpayers are unwilling to shoulder the expense of increased property tax and user fees, the city will ultimately have to cut from city services. This means less funding to maintain transit, utilities, emergency services, and recreational facilities.

Creative revenue thinking required

An alternative solution could be changing the laws which govern how the city collects property tax, Moore said.

Currently, Manitoba’s property tax laws do not differentiate between residential and commercial lands. If the provincial government amends this rule, the council will have the power to demand higher fees relative to a property’s scale and function. This could lessen the burden on homeowners, he explained.

It is not a cure-all, however, as businesses would be left to bear the burden at a time when COVID-19 has left many struggling to remain open. In the West End alone, nearly 60 businesses have shuttered since the pandemic began, wiping out four years of economic growth between 2015-2019.

Without intervention, city infrastructure will continue to deteriorate. Roads, bridges, and buildings will crumble, services will decline, and—in a worst-case scenario—Winnipeg’s water systems could fall into poisonous decay.

Moore hopes Winnipeg’s infrastructure deficit will be a top concern in the upcoming municipal election, but recognizes increasing taxes is not a popular political platform.

“The issue with infrastructure is it often doesn’t resonate with the broader public, so it’s difficult to know if ultimately there will be a lot of dialogue about it,” he said.

As a parting warning, Moore reminds Winnipeg’s public not to allow COVID-19 to become a scapegoat for the city’s financial woes. While the pandemic has significantly reduced user fees from transit, parking, and recreation, the deficit long predates it. 

Unfortunately, Winnipeg has been living beyond its means for decades, and now the debt has come due. The solution is expensive, but it’s never getting cheaper, Moore said. 

 “As much as I don’t really want to see my property taxes go up, I think any new council, if they’re doing the right things for the city, they have to start recognizing that we have to increase property taxes more than we have been,” he said.

Twitter: @searlety

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