The reality of much higher tax rates for the upcoming fiscal year is rattling city councils.

While preliminary budget projections are usually high and then get whittled down, the numbers for this year's budget cycle are raising eyebrows.

7%. 9.5%. 11%. Good heavens, can that be 14%?

Comparisons are often difficult because different cities have different components to their budget. For example, many cities now carve out water and sewer financials in a separate budget (or even a municipal corporation). Transit services might be a separate corporation, and so on. At the end of the day, citizens deserve to know the bottom line and what it is going to cost to operate their city.

Part of the trend of this year's healthy increases is simply that many municipalities need investments in services, capital facilities and operations. Many residents are tired of their vehicles bouncing through potholes, libraries that can't open for longer hours, sidewalks that don't get plowed, and so on. Balancing those demands for service and the public purse is one of a council's hardest tasks.

Another big budget difference this year—and an increasingly important factor in municipal financial planning—is the debt load. Toronto is facing a $1.5 billion operating deficit next year. Cities can't add that to long-term debt as the senior orders of government can as they merrily sail along on the good ship "WHO CARES?".

All cities have debt, because of their long-term capital investments for bridges, sewers, civic facilities and so on. The problem facing Canadian municipalities is the likelihood that interest rates will remain high for the next few years, which will increase operating costs in each annual budget. These bonds must be paid, so that puts added pressure on discretionary spending.

Local budgets are strained. A very random look at a few cities proves that the problem is universal: Hamilton started at 14.2%; Montreal and adjacent cities finalized from 5 to 7.2% for 2024; Saskatoon is 7.1% which is where Edmonton started; Sudbury ended at 6.7%. And on it goes.

Provincial coffers, on the other hand, are flush. Two reasons: first, the gush of pandemic money that flowed from Ottawa. While it was all supposed to go to Covid-related spending, provincial treasurers are nothing if not creative. Second, inflation is pumping money into provincial and federal coffers because of the higher cost of goods and services that have plumped Sales Tax revenue, and higher salaries that push employees into a higher income tax bracket.

Consumption taxes are a wonderful source of cash for governments.

The bottom line is that Canadian municipalities have a revenue problem. It is getting worse and will continue to get worse until there is a major structural change in financing our cities—such as giving Canadian municipalities a share of consumption taxes.

Sadly, however, I must report to you that while I am diligently searching the cerulean skies above, I am unable to discover any porkers wearing wings.