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City of Powell River caps tax exemptions

Community organizations will be facing assessment of need in future years
APPROVES CHANGE: City councillors passed a motion to put a cap on permissive tax exemptions granted to community organizations, which relieve the taxes these organizations face annually.

City of Powell River councillors have approved adjustments to the permissive tax exemptions that it grants to community organizations.

At the September 2 council meeting, councillors voted to adopt a permissive tax exemption cap of $400,000 for 2022, and that council direct staff to update its policy to include permissive tax exemption categories, financial needs tests, and guidance of a cap to be implemented for 2023. This means that some community organizations that have had full tax forgiveness in years past will be facing having to pay some municipal tax.

Councillor George Doubt said this is something council has been discussing for at least two years. He said that council referred the matter to the community finance advisory committee for advice.

“The advice from the community finance advisory committee in their recommendations was that council begin by adopting a cap on permissive tax exemptions, that is, a maximum dollar value that the city will provide for this purpose to basically defray the taxes of some churches, community social organizations and sports clubs,” said Doubt. “That has been an ever-growing part of the city’s budget and an ever-growing dollar amount. This is an effort to keep that under control to an extent.

“This would put a cap for all permissive tax exemptions approved by council for the 2022 tax year and council is then directing staff to update the policy for community partnerships to include recommendations to council for changes to categorize different applicants for different percentages of deductions, and suggesting financial needs tests that would assure that the city’s finances are going to subsidize groups that are in the most financial need.”

Doubt said this would be coming forward for the 2023 tax year.

“It will give people an opportunity to see what is coming and for organizations to prepare for any impact it might have on their taxation.”

Councillor Cindy Elliott saids she was kind of in favour of having a cap when the city considers policy for years beyond next year.

“I’d like to consider the idea of it being a percentage of the overall budget and it is then flexible along with the size of the city and doesn’t have to be reassessed each and every year or each time we have changes in the size of our city,” said Elliott. “I think it would be a good way to make sure the amount of organizations that we are supporting are in line with the size of our city.”

Councillor Rob Southcott said he was glad to see this come to council and he appreciated the community finance advisory committee discussing and working on the subject.

“I’m glad to see us moving toward a system that is based on a value and that is assessment of true need,” said Southcott. “We really have to work together to assess what we truly need and how we can provide those needs for ourselves as a community. It will no doubt involve greater challenge.”

Councillor Jim Palm said chief financial officer Adam Langenmaier’s research and report gave the city some goalposts to play by.

“I really appreciate that he has capped it at $400,000 for the coming year and that will give time for communications with all stakeholders in this regard on a go-forward basis,” said Palm.

Mayor Dave Formosa said he would like to thank Langenmaier, who did an “excellent job on the report.”

“I really want to recommend that anyone who has an interest in the permissive tax exemption, such as non-profits, faith groups or sports groups – it’s well worth a read,” said Formosa. “You will see in there how generous we are. I had a very good look at it. Powell River, for our population, and the amount we are handing out every year, you can see how generous we’ve been.

“It’s coming to the point where it’s growing very rapidly and we need to start paying attention for the best of all taxpayers.”

According to Langenmaier’s report, the city has received 79 applications for one-year permissive tax exemptions for the 2022 taxation year.

“Permissive tax exemptions have been rising over the past several years, putting increased pressure on existing taxpayers to subsidize operations of various eligible organizations,” stated Langenmaier in his report.

He stated that 2022 permissive tax exemptions are expected to be $421,675, which is equivalent to 2.09 per cent of the 2021 general municipal taxation. In 2021, the total permissive tax exemptions were $377,941, which was equivalent to 1.94 per cent of the 2020 general municipal taxation, according to the report.a