Higher user fees and, eventually, an accommodation tax needed, budget chief says
The Town of Niagara-on-the-Lake needs to find new ways to boost revenue, says Coun. Allan Bisback.
During a special meeting to approve the 2021 town budget, Bisback, who chairs the town’s audit and finance committee, said NOTL has “a revenue problem, not a cost problem.”
Seeing declining revenues, like parking fees, and the uncertainty that hangs over the coming year, the town needs to find a way to “support tax stabilization in the future,” he said, rather than cutting services to save money.
One way to boost revenues would be through a municipal accommodation tax, a controversial tool that many municipalities charge. However, heated debate on a so-called “hotel room tax” and pushback from the tourism sector a year ago forced council to abandon the idea.
Lord Mayor Betty Disero and Bisback, who supported the tax plan, said it's not a realistic option this year as the sector fights recover from the COVID hangover.
However, increased user fees, in line with increased costs of operating due to inflation and COVID costs, could be in the cards, Bisback said.
“My view is folks need to start understanding that there is a need for increased user fees,” he told The Lake Report.
This year town staff reduced the operating costs significantly to make up for revenue lost due to COVID-19, but that can't happen every year, he said.
“This is not a sustainable budget. This is a maintenance budget,” he said of the 2021 fiscal plan. As reported last week, the budget means a 2.12 per cent municipal tax increase, about $30 on a home assessed at $533,482.
“We really do need to turn our efforts to creating new streams and diversifying our revenue streams. We have no money in the bank to support any deficits,” he said.
Despite being impressed by the town managing to keep the tax increase low this year and coming up with a small surplus, Bisback said he doesn't believe the town can cut its way to success financially.
Relying on parking reserves, especially given the uncertain climate around tourism in 2021, is “very high risk,” he said.
In an interview Tuesday, Bisback said the town shouldn't be cutting services.
“There seems to be lots of rhetoric on various social media that we should be cutting, reducing. I'm a big fan of being efficient and providing more services, with the same money. I'm not a big fan of cutting, especially at the municipal level, because when you start cutting costs that tends to over time to reduce service,” he said.
“So, I'm a big fan, and I always have been through my whole career, of generating increased revenue, because if you have a fixed cost of providing service, every new dollar you bring in new revenue, a huge portion of it goes to the bottom line.”
Everything is getting more expensive, he noted. “Construction costs are going up, investment costs are going up, we're finding huge cost increases related to COVID on supply chains — steel, wood, those kinds of things — so I think things are going to continue to rise in price.”
He said being a tourism-based town, he's in favour of a municipal accommodation tax — part of which would go to supporting tourism and building tourism-related infrastructure, he said.
“There are nearly 30 municipalities that have that in place,” he said.
He said the town gets “a lot of pushback” when it increases fees, “but there has to be a point in time that we start looking at bringing fees up, based on the cost of providing more services.”
“I haven't got the magic bullet, but we need to start looking at opportunities around generating more revenue,” he said.
Disero favours a municipal accommodation tax but not until “we get out of COVID and the economy starts to recover.”
“This is not the year to do it because people are suffering. We have to wait until the economy starts to come back,” she said in an interview.
She said she's hopeful for the future.
“I truly believe that once we get beyond this pandemic, we'll start to see a major increase in tourism, particularly from Ontarians within Ontario to different places, Niagara region being one of them.”