City of Powell River staff members have been directed to prepare the 2021 to 2025 financial plan bylaw for council’s consideration.
At the March 25 finance committee meeting, chief financial officer Adam Langenmaier provided an overview of the third draft of the plan. He said at the January 28 finance committee meeting, which carried on to the February 8 special finance committee meeting, the committee gave direction for a specific tax rate scenario.
“The main point of that scenario was to provide taxation with an upper limit on the residential change on the average home to be five per cent, inclusive of utilities,” said Langenmaier. He added that in the commercial property tax category, there would be a 1.9 per cent reduction in average rate from 2020.
Langenmaier said if change in property value is by the average amount, taxpayers will see council’s desired change on the tax notices. He said in Townsite and Cranberry, there were increases above average. Westview and Wildwood are slightly below average, he added.
Langenmaier said there are two things still acting on the property taxes. One is the consolidated wastewater treatment plant debt portion plus the reduction of the city’s flat tax.
Taking last year’s property tax levy and comparing it to the 2021 property tax levy, there is a growth in taxation of $676,932. This equates to a 3.58 per cent increase over 2020. The wastewater plant debt represents $265,149, or 1.40 per cent, so at the end of the day, the discretionary change in taxation is $411.783, or 2.18 per cent, said Langenmaier.
For the average home, assessed at $383,833, a five per cent increase in property tax bill payable to the city will go from $2,997.09 in 2020, to $3,146.80 in 2021, for an increase of $149.71, according to Langenmaier. He said the average home went up 8.3 per cent from 2020 to 2021.
On the commercial property side, Langenmaier said from 2020 to 2021, there were 11 commercial properties added to the tax roll. However, the overall assessed value dropped by $3.6 million. He said as a result of this, with the desired change from council, commercial properties should see a reduction of just under two per cent in taxes. The average commercial property tax in 2020 was $7,657.28 and it will drop to $7512.12 in 2021, for a reduction of $145.16.
No changes to fees/services
There have been no significant changes to fees and charges and the city is still challenged by what kind of services it is able to provide, and that is more focused on recreation, given the health restrictions, said Langenmaier.
Government transfers are another big funding source for this year, said Langenmaier, and the city is pursuing a number of grant opportunities.
“With the programs coming out of the provincial and federal governments, they are really pushing to get things going,” said Langenmaier.
On the expense side of the budget, Langenmaier said the goal is to provide similar services to the prior year, understanding that the city is under some restrictions.
In terms of capital projects, the city has a long list of projects. Langenmaier said this is in part due to council’s decision last year to postpone its capital plan due to COVID-19.
“We weren’t sure what was going to happen and right now it leaves us with a bit of a backlog,” said Langenmaier. “Our capital plan looks big but the majority of our projects are carried forward from prior years. Tying capital projects to funding coming from the province and federal government, there is a lot of activity to be taken on.”
Budget preparation a challenge
In terms of financial impact, Langenmaier said this budget has been a challenge to prepare. He said he was being very cost conscious and also wanting to provide flexibility to get done what the city is wanting to accomplish, while acting in the world as it is right now.
According to a report from Langenmaier to the finance committee, the city has nearly $4.8 million in reserves. He said at this point there is not a reserve specifically for the new fire hall, but funds that have come from the recent sale of the Cranberry fire hall are held in a reserve.
“In summary, this was a challenging budget year,” said Langenmaier. “What we have is a budget that provides some relief to the taxpayer but still has the required increases to maintain services. We have contributions to reserve and we are also using our reserves to help smooth our operations.”
Further information about the budget can be found at powellriver.openbook.questica.com.
Finance committee chair councillor George Doubt said he had questions about debt, particularly pertaining to the wastewater treatment plant.
“Where are we in terms of our share of possible borrowing?” asked Doubt. “There is a limit to how much the municipality can borrow. Do we have room left?”
Langenmaier said the city is not near the limit. He said the city has used $10 million of the $27 million authorized for the wastewater plant. He said given that, the city’s debt usage is not unreasonably high. He said the city is in the midrange of utilization.
Doubt said in a COVID-19 year, when the city provided the services it did and faced all of the expenses, it was a significant achievement to have a minimal deficit in the budget. Langenmaier, in his report, outlined that the city had a deficit of $162,231, which will be offset by transfer from the COVID-19 safe restart reserve fund.
Councillor Maggie Hathaway said it was an unusual year because of COVID-19.
“We’ve done really well and we would have been negligent if we had not pursued all of the grant opportunities out there,” said Hathaway. “At the end of the day I think we’ll do well with that.”
Hathaway said in the coming years the city may have to look at reduction in services because the grant money will probably not be sustained long term.
“We need to keep it in mind that, if we are to keep the budget under five per cent, there are some services we may have to cut,” said Hathaway.
The finance committee directed staff to prepare the 2021 to 2025 financial plan bylaw.