How the city fills its coffers
WINNIPEG has a serious revenue problem. There is no single solution, and the city operates with fewer revenue tools than provincial or federal governments. But how city hall raises money is a growing concern, alongside the fact that the city faces a structural deficit.
Municipalities have an uphill battle given the technicalities of how property taxes are calculated. Unlike income and sales taxes collected by the province, property tax revenues do not automatically grow with inflation in the economy. To keep up with rising costs and maintain public services at status quo levels, the city needs to increase tax rates each year.
For years, Winnipeg failed to raise property tax rates in line with inflation and population growth, while relying more heavily on frontage levies, user fees and utility revenues. The long property-tax freeze from 1998 through 2011 weakened the city's revenue base and contributed to underinvestment in services and infrastructure. The 2026 alternative municipal budget by the Manitoba chapter of the Canadian Centre for Policy Alternatives estimates that, after inflation and population growth, city revenue per person in 2025 remained 1.9 per cent below its 2001 level.
This city has partially compensated over the last 15 years by increasing water-and-sewer rates, frontage levies, recreation fees and fines. This increasing reliance on utilities, levies, fees and fines has important equity considerations. One particularly problematic practice is transferring money from the water and sewer utilities into the city's general revenues.
This is not a new concern. In 2012, Manitoba's Public Utilities Board examined Winnipeg's water and sewer finances and estimated that about 20 per cent of utility revenue was then being diverted to general city purposes through dividends and other cross-subsidies. The PUB called this a "hidden property tax increase that should be made explicit and transparent."
This practice of overcharging for utilities and taking the revenues into city budgets continues. Winnipeg's 2026 budget has transfers of $17.35 million from waterworks and $27.84 million from sewage disposal, a combined $45.2 million, to general revenues.
Water and sewer charges are determined largely by how much water a household uses, not by the value of its home or its ability to pay. Research on residential water demand consistently finds that consumption changes relatively little as income rises. Housing is different — higher-income households generally purchase substantially more expensive housing.
Using water bills to raise money for general city services then shifts the financing burden away from owners of high-value properties, compared with raising the same revenue through property taxes.
Consider four recent Winnipeg home listings: a $1 million home in Tuxedo; a $680,000 Linden Woods home; a $480,000 St. Vital home; and a $180,000 North End home.
The city's 2026 budget notes that a one per cent municipal property tax increase raises approximately $7.6 million. Replacing the $45.2-million utility dividend would therefore require roughly a 5.95 per cent municipal property tax increase.
Using the 2026 municipal and relevant school-division mill rates, and assuming that the advertised sale price is also the assessed property value, replacing the $45.2-million water and sewer dividend with property taxes would add approximately $358 per year in municipal property tax to the $1 million Tuxedo home, $243 to the $680,000 Lindenwoods home, $172 to the $480,000 St. Vital home, and $64 to the $180,000 North End home.
Under the current system, by contrast, households of similar size and water use face similar utility charges regardless of whether their homes are worth $180,000 or $1 million. Lower-value homeowners then bear a much larger burden relative to their property wealth and, typically, their incomes.
A fairer approach would end the water-and-sewer dividend, retain utility revenues for utility purposes, and replace the general-revenue transfer with property tax revenue. Targeted credits or deferrals could further protect low-income rate payers. At the other end of the spectrum, the province could also look at enabling municipalities to charge higher tax rates on higher value homes.
Winnipeg needs more revenue to build, operate and maintain the services and infrastructure residents expect. The city should raise that revenue transparently and in ways that ask more from those with a greater ability to pay.
Jesse Hajer is an associate professor of economics and labour studies at the University of Manitoba. Tom Simms is a member of the Manitoba Seniors Equity Action Coalition.