Fredericton’s proposed operational budget for the upcoming year suggests maintaining the current internal tax rate despite the freeze on property tax assessments by the provincial government. Greg Ericson, chair of the finance committee, expressed the challenges posed by the freeze, limiting the city’s flexibility in budgeting its $184.8-million budget and benefiting only homeowners, not renters.
This freeze significantly impacted the budget process and planning, curtailing the potential for a tax rate decrease and restricting project considerations due to the exclusion of assessment increases. The province’s decision to freeze property assessments for 2026 is part of a broader review of the property tax and assessment system. The 2.4% increment in Fredericton’s tax base this year stemmed from new constructions, home sales, and major renovations.
Alicia Keating, the city treasurer, estimated that the freeze led to a revenue loss between $11 and $15 million for Fredericton, potentially allowing a tax rate reduction of five to 8.5 cents without the freeze. The external rate for households in recently annexed areas is set to increase by five cents per $100 of assessment, gradually aligning with the internal rate to cover service costs in outlying city areas.
Local government minister Aaron Kennedy highlighted the freeze as a crucial affordability measure amid ongoing property tax system evaluations. While the province allocated $5.3 million through the capital renewal fund, the city diverted this sum to offset inflation instead of addressing its infrastructure deficit, leading to continued growth in the deficit.
Inflationary pressures raised costs by 2.75% compared to the previous year, slightly surpassing the 2.4% growth in the tax base. The proposed budget allocates funds to key areas, such as a new transit route, enhancing community safety teams, and implementing a recreation master plan. The budget proposal will undergo a council vote scheduled for later in November.