So You Want a 0% Tax Increase?

Well, of course you do.

No one runs for Council or the Board because they are excited to raise property taxes. No one wants to tell residents or businesses that taxes are going up. And no one wants to pay more themselves.

A 0% tax increase sounds responsible. It sounds disciplined. It sounds like good news.

But a 0% tax increase does not mean the cost of providing services has stopped increasing. More often, it means those costs have been pushed into the future. And the future usually charges more.

Taxes Are Directly Related to Service Levels

Local government budgets are not simply financial documents. They are service plans.

Property taxes help fund services residents and businesses rely on every day, including roads, parks, recreation facilities, fire protection, emergency management, drainage systems, planning, bylaw enforcement, asset maintenance, financial administration, and many others. Those services cost money. There is no way around that.

So, when a Council or Board wants to reduce a proposed tax increase, the real question is not, How do we keep taxes low? The better question is, What services are we willing to reduce, delay, or deliver differently?

That is the conversation that matters.

Service Levels Drive Costs

There is a direct relationship between service levels and cost.

A basic road costs one amount. A road with sidewalks, streetlights, boulevard trees, traffic calming measures, and bike lanes costs significantly more. Neither option is inherently right or wrong. They simply represent different levels of service.

The same principle applies across local government operations. How often should parks be maintained? How quickly should potholes be repaired? How many hours should recreation facilities be open? What level of fire protection is expected? How quickly should permits, complaints, and service requests be addressed? When should snow be cleared from roads? How much should be invested in emergency preparedness, asset management, and infrastructure renewal?

These are not just operational decisions. They are service level decisions.

If elected officials want to materially reduce taxation, then service levels must be discussed openly and honestly. Otherwise, the budget process can become an exercise in making the numbers fit without addressing the services that create the costs.

Infrastructure Does Not Care About Election Cycles

Roads continue to age. Pipes continue to deteriorate. Buildings continue to wear out. Equipment continues to accumulate kilometres and operating hours.

Infrastructure does not care whether taxes increase this year or not. The bill eventually arrives. The question is whether today's taxpayers will pay a reasonable share of today's costs or whether those costs will be left for future taxpayers to address.

CPI Is Not a Local Government Budget

It is common to hear that tax increases should be limited to inflation or the Consumer Price Index (CPI). At first glance, that sounds reasonable.

But CPI was designed to measure the cost of goods and services purchased by households. Local governments do not operate like households. They purchase asphalt, culverts, pipes, specialized equipment, engineering services, insurance, legal services, software, construction contracts, and emergency response equipment. They must also comply with regulatory requirements, collective agreements, environmental obligations, and evolving community expectations.

The costs driving local government budgets often rise differently—and sometimes faster—than household inflation. Using CPI as a budget target may create the impression of fiscal discipline, but it does not necessarily reflect the true cost of maintaining existing service levels.

A Low Tax Increase Can Be Created on Paper

It is often possible to reduce a tax increase in the short term. Reserve contributions can be reduced. Maintenance can be deferred. Vacant positions can remain unfilled. Training budgets can be cut. Equipment replacement can be postponed. Studies, plans, and capital projects can be delayed.

These decisions may lower the tax increase today, but they do not eliminate the cost. The road still needs to be resurfaced, the roof still needs replacement, the water main continues to age, and the fire truck still reaches the end of its useful life. Staff workloads do not disappear, and infrastructure gaps continue to grow.

Consider a municipality that reduces annual reserve contributions to avoid a tax increase this year. The infrastructure does not stop deteriorating. Five years later, the replacement cost may be significantly higher, and the community may face a much larger tax increase than if funding had been set aside gradually.

The cost was never avoided. It was simply deferred.

Reserves Are Part of the Cost of Service

Reserve contributions are sometimes viewed as an easy place to trim a budget. But reserves are not simply savings accounts for "nice-to-have" projects. They are part of responsible service delivery.

Reserves help fund future infrastructure replacement, facility repairs, equipment purchases, emergency events, and other long-term obligations. They reduce reliance on borrowing, sudden tax increases, and reactive decision-making.

One of the fundamental principles of local government finance is intergenerational equity: taxpayers should pay a reasonable share of the costs associated with the services and infrastructure they use. If today's residents are benefiting from roads, buildings, parks, vehicles, and utility systems, then today's budget should include some contribution toward replacing those assets in the future.

Otherwise, future taxpayers inherit the bill for benefits they did not receive.

The Real Budget Conversation

For elected officials, the most important budget question is rarely, What tax increase do we want?

The more useful question is: What services do we want to provide, what level of risk are we willing to accept, and what will those choices cost?

What services are most important to the community? Where are expectations higher than available funding? Which services could be reduced, changed, or discontinued? What risks are acceptable? What obligations are being passed to future Councils, Boards, and taxpayers?

These are difficult conversations, but they are also the conversations that matter most.

A low tax increase without a corresponding discussion about service levels, risk, and sustainability can create a false sense of affordability. It may keep taxes lower for a year, but it can also create financial pressure that becomes much harder to manage later.

Financial Sustainability Requires Honesty

Taxes should never increase without scrutiny. Every budget deserves careful review. Every service should be open to examination. Every proposed increase should be understandable and defensible.

But setting an artificial tax target before understanding the services being funded puts the process backwards.

A more sustainable approach begins with the services being provided, the level at which they are provided, the assets required to support them, and the risks of underfunding them. From there, elected officials can make informed decisions about priorities, trade-offs, and affordability.

A 0% tax increase is not automatically a success, just as a 10% increase is not automatically a failure. What matters is whether today's taxpayers are paying a fair share of today's costs, whether service decisions are deliberate, and whether future generations inherit assets—or bills.

A tax increase can be deferred.

Costs cannot.

And the future usually charges more.