Living within its means is City of Powell River’s first strategic financial priority this year.
During last month’s financial committee meeting, Shehzad Somji, chief financial officer, outlined some of the big picture items that will form the city’s 2015 budget. He said the objective is to get a draft budget to council by January and he believes the finance department is close to that objective.
Somji said in the coming fiscal year, the city will strive toward long-term financial sustainability and best practices in internal processes.
In terms of strategic taxation levels, the Catalyst Paper Corporation tax revitalization, which will increase the annual industrial tax assessment by $500,000 a year for the next three years, has been completed.
Somji said some components of financial planning, such as union negotiations, a core service and operational review, and a detailed financial plan based upon the asset management plan, are in progress.
In terms of comparing the city’s general revenue between 2014 and 2015, tax levies in the 2014 tax year amounted to $14,965,701 with the 2015 figure forecast to be $16,066,552. Total revenues for the city in its 2014 budget were $21.2 million and are projected at $23.7 million in 2015.
“One of the priorities that came out of the 2014 plan was we didn’t want to see an increase in taxes for the next five years,” Somji said. “We have some new sources of revenue that are going to help us out.”
Somji said in 2014 the city required an additional $1 million in revenues to maintain operations. This was done through a reduction in the annual regional hospital district contribution of $500,000. There was a reduction in the contribution to equipment reserve of $220,000, and the city strategy was to increase revenues or decrease expenses by $280,000.
For 2015, the city will again reduce the annual hospital contribution of $500,000, and the $500,000 industrial tax addition from Catalyst will kick in. There will be an increase in non-market change, for vacant properties being turned into developed lots, amounting to $50,000. The one-time airport timber harvest will add $400,000 to the budget, which is a conservative estimate, Somji said. In terms of airport development, pertaining to the mayor’s announcement before the election regarding aviation businesses locating to Powell River, about $400,000 is expected to come out of that transaction.
It is expected there will be $400,000 from Powell River Community Forest and $90,000 is anticipated from Santé Veritas Therapeutics, the company planning to grow medical-grade marijuana in the old mill office site, which the company will be leasing. The company is awaiting approval of its licence by Health Canada.
The city received confirmation that its Small Community Grant will be $60,000 for the foreseeable future. There has been a forecast of traffic fine revenues of $60,000 in the coming year.
The total revenue increase for 2015 is $2,475,000. Somji said $1.2 million of that figure is one-time.
He then outlined expenses in 2014 compared to 2015. Total expenses in 2014 were $21.2 million and in 2015, $23.5 million. There will be a surplus of $238,472, which includes reduction of $220,000 to equipment reserve as per the 2014 Financial Plan. Somji said it is recommended the city maintain the contribution to equipment reserve, which leaves a surplus of $18,472.
The city wants to add two full-time equivalent positions in administration and finance. In terms of other staffing, there is an RCMP contract increase, a firefighters’ contract increase and the parks department requires additional hours to meet service levels.
There are increased costs in transportation of $50,000 and increased costs in recycling of $50,000.
Increase to the city’s reserves will amount to $1.4 million in 2015.
Somji said regarding the sewer operating budget, revenues are the same in 2014 and 2015 and expenditures are down slightly in 2015. Capital acquisition will increase nearly $700,000 in 2015 and reserves will go up $618,000.
“The reason for this is we have aligned ourselves with the city’s asset management plan,” Somji said. “We’ve used our reserves and we need to build that money back up. We don’t have a rate increase planned until 2019.”
