Devalued villages: Rural communities face tough 2021 budget choices

Nearly two dozen New Brunswick rural communities have begun budget deliberations for 2021 after being notified last week their tax bases are shrinking and there is little new municipal funding from the province available to help soften the shock.

Belledune, which is losing 11 per cent of its tax base and up to $540,000 in property tax revenue next year following the closure of the Glencore lead smelter, is in the middle of putting its 2021 budget together, which so far includes an increase in municipal grants from the province of just $173.

Mayor Joe Noel said the community is coping as best it can but he's hoping for more help from Fredericton to either fill in financial gaps or attract new business to the village.

"It's going to be a little tough for a while here, but it's not all doom and gloom," said Noel

"I do have a commitment from the premier that he'll help Belledune, and I take that commitment seriously."

New Brunswick communities fund themselves primarily through their own property taxes. But  something less than 10 per cent is supplied by grants and other transfers from the province, governed by complex revenue-sharing formulas written into legislation.

Belledune's budget problems are the most severe among rural communities this year, but on the other side of the province, the picturesque village of Blacks Harbour is in an even worse spot, facing a decline in its tax base, and the property tax revenue that it generates, for the sixth year in a row.

Coun. Mike Chase said the community of about 900 has no choice but to accept the ongoing reduction in assessed values delivered annually by Service New Brunswick, largely on the village's fish plants, and hope that they are trustworthy.

"It's unfortunate that you get this news and you really didn't see it coming after previous years of huge tax assessment reductions," said Chase. "I know personally I was not thinking we were going to be hit with another huge reduction."

Blacks Harbour's tax base, driven by lower property assessments in the community, is shrinking by $6 million in 2021.  That will cost it about $95,000 in property tax revenue, which the province will partially offset with a municipal grant increase of $37,500.

It's much lower than offsetting grants paid in previous years.

In the past the province has made up to 90 per cent of the difference of declining property taxes suffered in Blacks Harbour, but this year almost no new money has been added to the grant pool by the Blaine Higgs government and, with so many communities posting weak growth in their tax bases, money has been tight.

That will make next year a challenge, according to Chase.

"Your options are taxes rise or things have to be cut, so it's not a good situation," he said.

According to the Department of Environment and Local government, total provincial grants for municipalities for 2021 are up $400,000 to $75.9 million. But Saint John alone is getting a $1.03 million increase after its tax base barely grew, leaving all other communities with less to divide up.

In Nackawic, the town is still recovering from losing $450,000 in property tax revenue from a property assessment reduction granted to the local AV pulp mill by Service New Brunswick in 2013, and last week was told the mill's assessment is being lowered another 23 per cent in 2021.

That will leave about a $60,000 hole in the town budget of which increased provincial grants will fill less than 20 per cent.

Mayor Ian Kitchen said property taxes have already risen 13 per cent in the town since 2014 and he's not sure what can be done to fix the latest blow.

"We're trying to maintain what we have with a lot less money," he said. "We're going backwards."

Sussex Mayor Marc Thorne, who is dealing with a $2.2 million decline in his own town's tax base, believes assessment reductions are at least partly related to commercial properties impaired by the COVID-19 pandemic.

"Retail and suppliers can have that factored into their assessments,"  Thorne wrote in an email.

In total, 23 rural New Brunswick communities are facing a declining tax base in 2021, up from just five last year.

Kitchen heard a lot of talk about municipal tax and other reforms during the recent New Brunswick election and wonders if this might be a good time for the province to do something major.

"We're not exactly sure what the solution is but we'd like to sit down with people and say what are we going to do," said Kitchen.

"Small towns can't take that hit and keep operating."