FAS-007- Wage Escalation Policy_2025
Title: Wage and Benefits Budget Escalation Policy
Subject: Wage and Benefit budget increases Category: Finance and Administrative Services
Policy No.: FAS-007 M&C Report No.:
th
Effective Date: September 8, 2025 Next Review Date:
Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy:
Finance and Administrative Services
Related Instruments: Policy Sponsors:
FAS-001 Asset Management Policy Chief Administrative Officer
FAS-002 Investment Management Policy Chief Financial Officer
FAS-003 Reserves Policy
FAS-004 Operating Budget Policy
FAS-005 Capital Budget Policy
FAS-006 Debt Management Policy
Document Pages:
This document consists of 5 pages.
Revision History:
November 25, 2024
September 24, 2019
Common Clerk's Annotation for Official Record
Date of Passage of Current Framework: September 8, 2025
I certify that this Policy was adopted by Common Council as indicated
above.
September 9, 2025
City Clerk Date
Date Created: Common Council Approval Date: Contact:
Finance and Administrative Services
City of Saint John
Wage and Benefits B udget Escalation Policy
TABLE OF CONTENTS
1. PURPOSE AND CONTEXT…………………………………………………………………………………………….3
2. POLICY STATEMENT.................................................................................................. . 3
3. DEFINITIONS............................................................................................................... 3
4. PRINCIPLES AND APPLICATION .................................................................................. 3
5. ROLES AND RESPONSIBILITIES .................................................................................... 5
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City of Saint John
Wage and Benefits B udget Escalation Policy
1. PURPOSE AND CONTEXT
1.1. The City’s long-term financial plan has put the City on a sustainable path and to
continue to be sustainable, the City must find ways to control costs at risk of
escalating faster than its revenue growth.
1.2. To be sustainable, wage and benefit budget increases should not exceed assessment
base growth.
1.3. The Wage and Benefits Budget Escalation policy provides policy that ensures the
ability to pay is a key consideration in future wage and benefit budget
recommendations.
2. POLICY STATEMENT
2.1. The Wage and Benefits Budget Escalation Policy is established to ensure that the
City remains sustainable by aligning expenditure growth with tax base growth.
2.2. The Wage and Benefits Budget Escalation policy objectives are as follows:
The City spends within its means.
Wage and Benefits Budget escalation does not cause a tax rate increase to
balance the General Operating Budget.
Wage and Benefits Budget escalation does not cause a reduction in service
levels to balance the General Operating Budget.
Wage and Benefits Budget escalation does not exceed the City’s
assessment base growth.
All employee groups are treated equitably.
3. DEFINITIONS
Municipal Assessment Base for Tax Purposes – means the total amount of
property values that generates municipal revenue for property tax purposes.
Assessment Base Growth – means the percentage increase in the Municipal
Assessment Base on an annual basis.
Phase In Period – The budget years for which the new equalization formula
is being phased in, specifically 2026-2029.
4. PRINCIPLES AND APPLICATION
4.1 Principles:
4.1.1 Wage and benefit budget increases must be affordable.
3
2022202320243 Year Rolling AverageCPI + 1
6.24%8.76%8.65%7.88%5%
City of Saint John
Wage and Benefits B udget Escalation Policy
4.1.2 Wage and benefit budget increases must not exceed the tax base growth.
4.1.3 Notwithstanding clause 4.1.2, wage and benefits budget increases cannot
exceed the average of NB CPI for the months of January to September plus
1% in the prior year of annual budget (Example – 2025 Operating Budget
would use January to September 2024 NB CPI for calculation), unless it is
supported by a business case and approved by Common Council.
4.1.4 Bargaining or non-bargaining employees are treated equitably.
4.2 Application:
4.2.1 The City Manager shall recommend increases to wages and benefits budget
in accordance with the Wage and Benefits Budget Escalation Policy.
4.2.2 Recommendations for the increase in the wage and benefit budget shall be
calculated based on the sum of the following:
Percentage increase based on the previous three-year rolling average
of Tax Base Growth (%), and
50% of the annual incremental equalization revenue received from
the Province ($) (100% of the annual incremental equalization
revenue is permitted prior to the Phase In Period).
4.2.3 Utilizing a Three-Year Rolling Average is a recommended approach due to
the following factors:
The fluctuation in the assessed value of properties for tax purposes
will be smoothed out by the rolling average.
Historical trend can help predict future growth.
The Three-Year Rolling Average is a reliable source of information
that can be validated.
A wage and benefit budget model based on the Three-Year Rolling
Average is predictable, affordable and equitable.
Example of a 3-year rolling average of tax base growth:
4.2.4 In any case, the increase in the wage and benefit budget shall not exceed the
average of New Brunswick CPI from January to September plus 1% plus 50%
of the annual incremental equalization revenue (100% prior to the Phase In
Period) for the calendar year unless it is supported by a business case and
approved by Common Council.
See below for an example of the calculation of NB CPI for the calendar year:
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2024 Calendar Year
JanFebMarAprMayJunJulAugSep
6.5%5.9%4.2%4.3%2.3%2.1%2.9%3.5%4.0%
Average4.0%
City of Saint John
Wage and Benefits B udget Escalation Policy
4.2.5 An additional growth factor of 1% may be applied to fund new positions
associated with operating and maintaining new assets, new service levels
and new infrastructure conditional upon tax base growth for the upcoming
year exceeding CPI plus 2 and supported by a business case.
4.2.6 Examples of business cases would include if the additional wage and benefit
budget would increase City revenues, reduce City expenses or is required to
service newly built infrastructure or new service levels.
4.2.7 Any wage and benefit budget increases for employee groups that are beyond
the City Manager’s recommendation may result in a corresponding
reduction in the workforce of those groups.
5. ROLES AND RESPONSIBILTIES
5.1 Council shall:
5.1.1 Approve the Wage and Benefits Budget Escalation Policy.
5.1.2 Direct staff to use the three-year rolling average of the assessment base
growth in future contract negotiations.
5.2 Finance Committee shall:
5.2.1 Recommend the Wage and Benefits Budget Escalation Policy to Common
Council for approval.
5.2.2 Review any changes to the Wage and Benefits Budget Escalation Policy in the
future.
5.3 The Chief Financial Officer:
5.3.1 Review annually to ensure that wage and benefit budget comply with the
Wage and Benefits Budget Escalation Policy.
5.3.2 Update the three-year rolling average of the assessment base growth on an
annual basis and make the information available to Human Resources and
all employee groups.
5.3.3 Recommend any changes to the Wage and Benefits Budget Escalation policy
in the future.
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