City forecasts need for 9.9% property tax increase next year

WATCH: The City of Saskatoon could be facing one of its largest ever tax hikes next year.

The City of Saskatoon could be facing one of its largest ever tax hikes next year.

City administration will present a report to the city’s governance and priorities committee next week that forecasts property tax increases of 9.9 per cent in 2026 and 7.3 per cent in 2027.

“The city continues to face increasing costs from inflation and the needs of a growing city, and non-property tax revenue sources continue to not keep up with inflation and growth,” chief financial officer Clae Hack said Wednesday.

The increases amount to $22 and $18 per month, respectively, for an average assessed home value of $397,000.

Hack noted city councillors are likely to look for cuts, rather than approve such a sizeable hike, much like the previous council did in 2023 when the city lowered a $75 million dollar shortfall by $39 million.

But Hack said the forecast is a reminder of the effects ongoing inflation and rapid population growth have had on city finances.

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“There’s definitely no silver bullet. There’s not going to be one easy decision that doesn’t impact anybody across the city. So, it’s going to be a combination of various things,” Hack said about efforts to reduce the tax hike.

The largest pressure on the city is the Saskatoon Police Service (SPS) budget, which accounts for more than one-third of the potential increase.

The police operating budget is projecting increases of 10.4 per cent in 2026 and 6.4 per cent in 2027 over its existing budget, which Hack largely attributed to salary increases — part of binding arbitration over a new collective bargaining agreement.

Without any other increases to expenses, the police budget alone would account for a 4.09 per cent increase to property taxes.

“They recently had an arbitration settlement come in. So, funding the results of that and then future collective bargaining estimates are a big part of their budget increase,” Hack said.

Hack says phase-in expenses previously directed by council and maintaining existing service levels also impact the budget. The Link transit system, the new leisure centre planned for growing areas on the east side of the city and two new fire halls, among other expenses, will add approximately $7.5 million and $9.6 million in 2026 and 2027 respectively.

Population growth and increasing inflation are also impacting revenue, as well as expenses.

According to Statistics Canada, Saskatoon added 12,896 people in 2024. Newcomers to Saskatoon accounted for 42 per cent of the province’s population growth last year.

Even though the city has collected nearly 19 per cent more in property tax revenue since 2022, the value of the revenue can’t keep up with expense pressures, making the city more reliant on property taxes.

“We’re seeing things like our user fees or our government grants maybe not growing at the same pace of the expenses. So when you think about the property tax, not only does the property tax need to pick up its share of the expenditure pressures the city’s facing, but it also needs to pick up the share of other revenues that aren’t keeping pace,” Hack said.

Inflation, while not as significant as in 2022 or 2023, is also a major factor. Hack says asphalt costs have risen by nearly 40 per cent in the last four years. Cement also costs 11.4 per cent more than it did last year and 30 per cent more than it did in 2020.

Hack said administration hopes to present a “refined” budget with a minimum one per cent reduction to the property tax increase by November.

“It’s not ideal. Nobody would like a zero per cent property tax increase more than I would. But I think in our role, our main job, especially since everything that we do happens in the public, it’s to provide the clear, transparent view of the needs facing the city,” Hack said.

The largest property tax increase since at least 1987 was a 7.43 per cent increase in 2014, followed by a 6.04 per cent increase in 2024.