Taxpayers will likely have healthier pocketbooks in 2015 when hospital taxation is forecast to drop significantly.
At Powell River Regional District’s committee of the whole meeting, Thursday, December 11, Linda Greenan, manager of financial services, outlined a recommendation that the regional hospital district provisional budget requisition for 2015 be reduced from the 2014 figure of $1,934,200 to $950,000.
“That’s a 51 per cent decrease,” she said.
This is possible because the debt for the construction of Powell River General Hospital has been retired. While the completion and occupation of the new complex care facility is nearing, meaning a new long-term taxation commitment, the differential between the mortgage payments for the hospital and Willingdon Creek Village is significant when factoring in lease payments for the facility from Vancouver Coastal Health.
Greenan said the $950,000 figure would allow for contributions to the hospital reserve.
“We could build enough funds over the 10-year amortization of the loan so that if we did have an interest rate increase to eight per cent, we would be protected,” she said. “We wouldn’t have to have a requisition increase.
“If the interest rate in the 11th year went above eight per cent we might have to increase that requisition above $950,000 to pay the interest payments.”
Colin Palmer, committee of the whole chair, asked if contributions to a reserve would only be there to take care of potential increases in the borrowing interest after year 10. Greenan said the bulk of it would be for that purpose.
“There would be some money for something else,” she said. “If we did use some of that reserve fund in earlier years, it would mean we would somehow have to get that money back.”
Greenan said looking at 2034, the year the 20-year amortization on Willingdon Creek Village ends, there is a reserve of $327,680 showing in the fund. “So, effectively, there is $327,000 that could be spent without having to increase the requisition in those last 10 years if the interest rates went to eight per cent,” she said. “There’s a bit of a cushion in there.”
Palmer said he has attended a couple of the GP for Me meetings in Powell River and there might be something coming to the regional board so he was wondering if there was any money in the budget. The program is an initiative between physicians and the province to help people find family doctors.
“It’s not just for the potential increase of the loan, is it?”
Greenan said the bulk of it would be but there’s some play in the budget.
“If we did spend $327,000 we could still go along with this plan,” she said. “If we spent more than that we might have to consider, if the interest rate did increase to eight per cent, increasing the requisition in 2024. It all depends on what the interest rate does.”
Palmer said that Vancouver Coastal Health pushes the envelope at times, telling the regional hospital board there is a crisis, and that it has to come up with money.
“Usually we say no but sometimes we say yes. Just to know that kind of money is there is good.”
Greenan said the budget also identifies an annual contribution of $240,000 as a maintenance reserve because the regional hospital district owns the Willingdon Creek Village building.
“There will be some onus on the regional hospital district to maintain the envelope of the building.”
Palmer said that there will be significant changes in hospital taxation in the coming year.
“This means your hospital tax is going to go down by 51 per cent,” he said. “That includes the city, because the city’s tax rate is exactly the same as it is for the electoral areas.
“That doesn’t mean your total tax will go down but my hospital tax will go down about $95 a year.” The amount of reduction in hospital taxes will depend on the overall assessment of individual residences.
Palmer said the regional hospital board owns the Willingdon Creek Village facility because it arranged to borrow the money from the municipal finance authority. Vancouver Coastal Health is paying half the bill on a lease agreement basis.
“Right now, we have been told that Willingdon Creek Village’s budget is right on,” Palmer said. “We have been told not to expect anything more than what the budget says. It’s 94 per cent finished, so if we all keep our fingers crossed, we might even come in under budget, which is absolutely amazing.”
Greenan said that VCH is scheduled to have the facility operational on February 1, 2015.
