City of Powell River council will consider beginning the long and involved process of putting together its 2022 to 2026 financial plan.
At the August 26 finance committee meeting, chief financial officer (CFO) Adam Langenmaier said this is the kickoff to budget season for the City of Powell River. He said he was bringing the matter to the finance committee because it was council’s first chance to determine the direction it wants to go, and a chance for staff to communicate the direction that was given in the past five-year financial plan, and staff is going to assume that is the direction it will be following.
“When we pass our financial plan, it’s a five-year plan,” said Langenmaier. “Where I start this year’s financial plan is year two of last year’s financial plan.
“We all know it is difficult to tell the future and we know this current expectation that is now a year old will need some focusing. This is council’s first chance to say there needs to be a specific focus, or let’s continue on with what we are doing.”
Langenmaier said the residential tax assessment is expected to increase. He said house and property prices have gone up. He said what is different is the commercial impact. He said last year, commercial properties fell in value, and he would expect a similar trend due to COVID-19 and other factors.
“That is an estimation – we don’t know if that will be for sure,” said Langenmaier. “What that says to us is we will likely have a difference in how our assessment mix is going. We know that commercial produces a bit more property taxation than residential, so it’s something we will have to consider.”
Langenmaier said based on projections for 2022, total tax revenues will be $21.2 million, compared to 2021 budgeted tax revenues of $20.2 million, an increase of $1 million, or 4.9 per cent. He said there is an expected increase in operating expenses of about $786,000. This is a bigger increase than last year but that’s because the 2021 budget was reduced due to COVID-19, according to Langenmaier.
“The 2022 budget was increased, assuming we would be all back to normal,” said Langenmaier. “This year is a bit of a challenge because: are we back to normal?
“I’m going from the strategic plans. Are we getting what we want done? What do we think we can achieve?”
Langenmaier said inflation is going to be challenging this year. He said he looks at two different tests for inflation. He said the BC index from June 2020 to June 2021 is 2.4 per cent, and the previous year, it was measuring at 0.5 per cent. The Canadian inflation rate is trending at 4.2 per cent, and compared to 2020, it was only 0.7 per cent, said Langenmaier.
“We could see big increases in costing,” he said.
Langenmaier presented a budget timeline to the finance committee for council’s consideration. The public consultation process will be similar to prior years, with the public having the opportunity to appear at meetings, and an online engagement process being facilitated. Langenmaier said he was looking for council’s endorsement of his proposed timeline, and that the services identified in the 2022 year of the 2021 plan become the basis moving forward, unless council wants something different.
Finance committee chair councillor George Doubt said the city was at the beginning of a long process and would hopefully be hearing a lot from the public along the way.
The finance committee gave unanimous consent to send the chief financial officer’s recommendations to the September 2 city council meeting. The CFO recommended that the 2022 budget timeline be approved as presented, that the 2022 public consultation process use an online platform, seeking public input at budget presentation meetings and through the city’s website, and that the city services funded in 2021 form the basis for services funded in 2022.